Five months into 2013 and issuers successfully priced 26 private-label mortgage bond deals.

The deals are worth $11.2 billion, and analysts at Deutsche Bank (DB) say that number will surpass $20 billion this year.

And so far, newly originated jumbo mortgages are dominating the market. They say year-to-date issuance in prime jumbo increased 448% compared to the $1.07 billion new issuance in the first five months of 2012.

This equals a 47% market share, with servicing advance deals in a distant second at 20%.


The largest issuer driving that dominance is Redwood Trust (RWT) which is now eight deals in, totaling nearly $7 billion.

JPMorgan Chase (JPM) estimates a market up to $30 billion in size, by way of comparison.

"Year-to-date aggregate deal size of prime jumbo deals, NPL deals, seasoned deals and servicing advance deals are $5.3 billion, $1.7 billion, $2 billion and $2.3 billion, respectively," write analysts Ying Shen and Jason Wu with Deutsche Bank. "That is a 172% increase from $4.1 billion, the aggregate deal size of private label RMBS issued during the same period one year ago."

Legacy private label bonds, also known as nonagency, are currently trading very well in the secondary market.

Deutsche analyst Christopher Helwig added that banks and Fannie Mae and Freddie Mac sold roughly $3 billion in legacy nonagency RMBS.

Foreign banks also threw in another $8 billion in sales.

"The rally in non-agency has likely driven prices higher than the amortized cost at which the banks hold these bonds, allowing them to sell without taking a loss," Helwig writes. "Bank balance sheets both domestically and abroad could become a contingent source of supply of non-agency bonds given continued strength in that sector."