A heavy European primary issuance calendar has put some pressure on spreads with deals pricing on the wider side of guidance but industry players say that the weighty year-end forecast should remain on the tighter side of pricing - much in line with 2005's pricing story.

Morgan Stanley analysts report that most European spreads remain unchanged with triple-A rated U.K. prime RMBS paper pricing one basis point wider than at the start of the year and triple-A CMBS is three basis points wider. Both triple-B RMBS and CMBS are 10 basis points tighter than at the end of 2004. Neil McLeish, a corporate strategist at Morgan Stanley expected corporate spread movement to have a greater influence on ABS spreads than issuance volumes. McLeish said that corporate spreads are expected to "grind slightly tighter into year-end" and consequently expected European ABS spreads to remain in the a narrow range.

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