It's been another tough week for the European market, as trades remained weak on the bid side, and new issuance continued flooding into the primary market. Still, Northern Rock's Granite 2005-2 transaction elicited a surprisingly strong response to guidance levels issued at the start of the week, considering the tight pricing recently posted by prime RMBS deals.

"I think that when you actually take a look you'll find that the pipeline for prime RMBS is pretty thin and things are starting to pick up from pricing levels achieved on triple-A paper in last week's market," said one trader. "I think a few months ago no one would have thought that prime Dutch RMBS would be trading at 15 basis points over Euribor."

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