As new securitization deals priced last week, market participants said that a sound benchmark for primary issuance has been established, making it easier to gauge what direction the European ABS market will take for the rest of this year. "Investors have come back very selective and very cautious - they are not buying the market wholesale," said one analyst.

Among the recently priced transactions is U.K. prime residential mortgage issue Granite 2002, originated by U.K. issuer Northern Rock Plc. It's the second-largest deal so far this year and the fourth from Northern Rock's master trust. The E4.45 billion transaction priced its 10 tranches within price talk. According to Royal Bank of Scotland (RBS), the newly priced Granite saw its Euro- and Sterling-denominated tranches - the class 2-A, 2-B, 2-C, 3-A, 3-B and 3-C - trading tighter as of press time. The five-year Series 3 class A tranche was trading at a discount margin of 17 to 18 basis points over - two basis points tighter than pricing. "It's led some market participants to conclude that the deal may have been mispriced," said one market analyst.

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