The May Day holiday-shortened week saw little activity on both the primary and secondary markets, but sources said the rest of May looks set to bring significant volume, as a number of transactions were on the sidelines, preparing to circulate before the close of the month. Analysts at The Royal Bank of Scotland said it could lead to some initial spread softening that is expected to be short-lived as there's still plenty of cash to be put to work in these markets.

On the U.K. front, there was some hefty volume accumulating last week, expected to price by last week's close. Paragon Mortgages was in the market with its new RMBS deal that will include two U.S. dollar-denominated tranches dated at 3.4-years and 5.9-years, and two sterling- and euro-denominated pieces. Northern Rock also began marketing Granite Mortgages 2004-2 via Citigroup Global Markets, Credit Suisse First Boston and Lehman Brothers. The deal will include two triple-A pieces denominated in dollars and two other triple-A rated pieces issued in euros and sterling. It's expected to close at the end of May. The market is also preparing for the launch of a new subprime issue from GMAC-RFC who is expected to launch its RMAC 2004-NS2 later this month.

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