From HousingWire, via Clusterstock.

Top bond traders are not as worried about pending cramdown legislation as some might think — and some are now loading up on Alt-A MBS after what they see as a fear-based sell-off. According to top traders in asset-backed hedge funds who spoke with HousingWire, they’re now loading up on certain subprime and Alt-A products while telling investors to expect big returns this year from distressed asset bets in the residential mortgage sector.

“Sure it’s spotty, not everything is moving, but we are definitely trading MBS and making a market,” a trader with New York-based Guggenheim Partners, LLC said Friday on condition of anonymity. “What’s moving now is the last cash-flow senior tranche subprime bonds. At prices in the low 20s, it’s hit bottom and the top ABS traders in hedge funds are gobbling it up.”