The European securitization market prepares to exit another landmark year, with industry estimates of 205 billion ($272 billion) being placed this year - accounting for a 15% increase over volumes recorded at year-end 2003.

Although issuance has increased, it's done little to curb appetite, as continued demand imbalances caused tightening spreads across most asset classes this year. Industry sources attribute the continued shift in the pricing dynamic to a broadening investor base that includes hedge funds new SIVs, institutional and retail funds, as well as private banks. "We believe that Basel II and the benefits it will bring to ABS has been responsible for generating much of the new interest in the sector," reported Morgan Stanley analysts.

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