Over 90% of the European market is trading at distressed levels and senior bonds still rated triple-A sit squarely in this category, said a panelist speaking at the European Securitization Forum/Information Management Network Global ABS conference today.
The European market is currently divided into two distressed debt situations. The first is where the underlying collateral is fundamentally sound but trading in a distressed market environment. The second is where the underlying is running into difficulties associated with the sponsors falling into problems as seen in the commercial real estate area.
"What you have in Europe is lots of hidden treasures down the capital structure," said Pius Sprenger, head of European ABS trading at Deutsche Bank. "In the U.S., even though structures were quite heavily hit because of subprime, they are quite frequently traded."
Alistair Jeffery, chairman and CEO of Bluestone Capital Management, said that his interest was with underperforming whole loans that are stranded with servicers that are not prepared to deal with these loans. He added that Europe had some extraordinary opportunities and those retaining their poise would be instrumental in shaping the market.
