Step 1: The CDO tranche is rated AAA because the credit model estimates inter-pool default correlation at 0.3%, indicating that mortgage pools will not fail simultaneously. Step 2: Because the tranche carries an AAA rating, institutional investors classify it as equivalent in risk to US Treasury securities and purchase it at Treasury-equivalent spreads. Step 3: Strong institutional demand at those spreads allows originators to underwrite additional mortgage pools at the same tight pricing, which is consistent with the 0.3% default correlation assumed in Step 1. Step 4: The sustained institutional demand documented in Step 3 confirms that sophisticated market participants have independently validated the 0.3% default correlation estimate that underlies the AAA rating in Step 1. Step 5: Therefore the AAA rating assigned in Step 1 is externally confirmed by the market pricing behavior observed in Steps 3 and 4.