Standard & Poor's said in a report  that 2009 is likely to present the greatest pressure on European structured finance collateral performance since the market's inception.   Analysts stated that they expect collateral deterioration to contribute more strongly to negative rating actions.

"Broad economic deterioration could lead to higher corporate insolvencies and unemployment, and, in some cases, continued deterioration in underlying asset values," said Andrew South, surveillance credit analyst.   The report stated that collateral performance could come under significant pressure in most European structured finance asset classes, although higher-rated tranches remain better protected from default, given their greater levels of credit support. 

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