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.

Also pricing last week was Cards 2002-B Plc, the U.K. credit card receivables securitization. MBNA Europe Bank priced its E785 million within price talk, inside the previous three deals originated from the same CARDS master trust. The class A notes priced at 16 basis points over three-month Euribor; class B notes priced at 50 basis points over; and the class C notes priced at 120 basis points over. Barclays and Deutsche Bank co-managed the deal.

More issues were flooding the pipeline last week, and RBS said that the next few weeks will be busy ones - particularly because new deals are appearing faster than old deals are being priced.

New on the front is Southern Pacific Securities E Plc, a U.K. subprime RMBS issued by Southern Pacific Mortgage and Southern Pacific Personnel Loans ltd. The GBP325 million transaction co-managed by Barclays Capital and Lehman Brothers will be issued in three tranches through a true sale structure. Barclays Bank Plc will provide a GBP10 million liquidity facility. CFSB also began marketing one other U.K. subprime issue - a GBP200 million transaction for Preferred Residential Securities 5 plc.

The Italian Treasury is back from the drawing board with its modified real estate transaction. Originally slated for a summer release date, the deal was delayed by the new Eurostat regulations against government-supported securitizations. The new regulations do not allow governments to count certain transactions towards the reduction of GDP - including the past Italian lotto and real estate deals. Now, instead of the planned E7 billion in two transactions this year, the treasury plans to issue only E1.1 billion and to hold the remainder for next year on the promise from the Italian ministry that ABS will continue to be an important debt management tool.

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