Barclays Capital analysts expect that publicly placed issuance for 2012 in the European asset-backed market will exceed their original forecast.
Their updated estimate is in the ballpark of €59.5 billion ($78 billion), 20% higher than the €49.5 billion projected at the start of the year. Volumes reached 40.9 billion during the first eight months of 2012.
Slim yields have drawn originators out into the marketplace. “With spreads markedly tighter from the start of the year, issuance has become more attractive and economical for issuers,” the analysts said.
But activity is likely to slow in the months ahead, as U.K. prime mortgage lenders — the most active issuers for some time now — are likely to choose the Bank of England’s Funding for Lending Scheme over securitization for a portion of their financing. Barclays analysts theorized that continental European issuers could pick up the slack as long as the euro crisis does not intensify.
Combined, the number of publicly-placed, privately-placed and retained ABS deals in Europe reached 117 for the first eight months of the year, according to Barclays’ database. The notional value of all of this paper came to €159.9 billion. The bulk was retained, as seen below.
Still, the proportion of retained issuance has fallen since last year.