Investor demand for non-agency or private-label residential mortgage-backed securities (RMBS) is overwhelming the current supply, according to global asset management firm Smith Breeden Associates. Appetite for private-label brought prices for some prime and Alt-A RMBS mortgages as much as $10-20 since the March lows, while some tranches in the ABX index -- representing a range of subprime securities -- rose more than 25% since March. Investors include dealers, hedge funds, real estate investment trusts (REITs), banks, insurance companies and money managers. Smith Breeden attributed some of this revival to the Treasury Department's Public-Private Investment Program (PPIP). Program managers, having raised enough private capital and Treasury equity and debt to wield $16bn in purchasing power, are ready to put capital to work. But non-agency RMBS is seeing little new production and heavy borrower defaults, indicating "non-agency RMBS securities are going away" for now, Smith Breeden said. Write to Diana Golobay.