Most Subprime MBS Carry Interest-Rate Protection For Investors, Bear Stearns Tops List of Providers
September 14, 2006
Issuers of subprime mortgage securities continue to sweeten the deal for investors by providing swaps, caps and other derivatives to reduce interest-rate risk on these bonds, according to the Inside Mortgage Finance MBS Database. A total of $342.70 billion of non-agency MBS issued during the first half of 2006 carried some form of derivative support, representing about 58.3 percent of total issuance. Derivatives were, by far, most prevalent on subprime securities, with 92.3 percent of these bonds... [Includes one chart.]