The launch of the tranched ABX, known as TABX, got off to an expected slow start last week as dealers waited to see who blinked first given the weight of bad news from mortgage lenders stirring up the cost of protection on asset-backed securities. Traders reported genuine interest in the correlation index based on the 06-02 and 07-01 vintages of the ABX. But many noted calls they received last week were from investors poking around for two-way prices. "This would definitely be a natural product for a buy and hold investor, but right now the mark-to-market hedge fund players are driving everything," noted a trader. As of Wednesday afternoon, several dealers reported that no indicative prices had been shown.
Markit Group, the index administrator, is in the process of getting the tranches rated and those ratings are expected within the next couple of weeks, an official said. Markit expects the ratings to boost interest in the index.
