Last week’s reintroduction in the US Senate of a bill aimed at amending the bankruptcy code to allow the modification of mortgage contracts – and its backing by Citigroup – has sent tremors through the market for mortgage-backed securities.

The ABX index, which tracks the value of securities linked to subprime mortgages, fell sharply, with the value of triple A rated securities backed by subprime mortgages falling up to 6.5 points.