U.S. home loan bonds without government-backed guarantees rallied for a second week, after declining as other credit markets gained in February and March.

The most-senior securities backed by option adjustable-rate mortgages rose 1 cent on the dollar to 56 cents last week, compared with a record low of 33 cents in March 2009 and 58 cents in early January, according to Barclays PLC. The "catalyst" was increased demand resulting from changes to a federal loan modification program as investors confront a "scarcity" of potentially higher-yielding home loan securities, with corporate debt at the tightest spreads since 2007, JPMorgan Chase & Co. analysts wrote in a report.

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