The Federal Reserve's decision this week to reject five commercial mortgage bonds as collateral for loans under its Term Asset-Backed Securities Loan Facility program has created confusion and uncertainty in this corner of the debt market.

This is the second time in six months that the central bank has rejected commercial mortgage-backed securities, bringing its total rejected issues to nine. Each time, the Fed has not offered any reason for declining to accept bonds that otherwise meet its criteria for acceptable collateral under the program.

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