European ABCP has stabilized and will likely remain that way. It also has the potential for growth through product innovations,  Moody's Investors Service said.

"While we have not returned to the halcyon days before the credit crisis, the market has reached a new equilibrium, reflecting the fact that ABCP remains both an important source of funding for banks and their clients and a core product for investors," said Masako Oshima, a senior credit officer at Moody's.

According to the rating agency, Moody's-rated conduit issuance levels declined steadily during the credit crisis from $488.4 billion at yearend 2006. However, total issuance stabilized in 2010 and stood at $183 billion in August 2010.

Oshima noted that the increasing shift to full-support structures has highlighted the linkage between the ratings of ABCP programs and the ratings of supporting banks.

However, the sector continues to face certain challenges, particularly in sponsors' ability to meet investor demand regarding maturities.

One trend that Moody's analysts noted is how the phasing-out of bank support schemes across Europe will put debt ratings under pressure.

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