The upward trend in European issuance remains unstoppable. As evidence, by the middle of last week, dealers were expecting at least 18 billion ($22.9 billion) of the 42 billion circulating in the new issues pipeline. Meanwhile, the RMBS sector continued to roll in the deals, with new issues entering the pipeline as giant deals priced.

The European Securitization Forum (ESF) tallied total securitization issuance in the third quarter this year at 107.1 billion, a 150% rise on the same period a year ago, mainly driven by the large wave of RMBS activity. According to ESF figures, RMBS issuance totaled 150.6 billion in the first three quarters, an increase of over 70% in the same period last year. RMBS issuance now accounts for 53.2% of the European securitized market, compared with 48.1% at this stage in 2005. But despite this growth in supply, deals are still benefiting from tight spreads, which should continue to fuel growth in this market sector.

On the U.K. RMBS side, activity has not been subdued by the large transactions that have come to market over the past weeks. Northern Rock announced that it would be returning to market with its fourth Granite transaction issued so far this year. Northern Rock plans to issue GBP3.25 billion ($6.19 billion) worth of RMBS bonds. Deutsche Bank, Lehman Brothers and Merrill Lynch are managing the deal.

Abbey also announced plans to sell a GBP3.5 billion RMBS. Barclays Capital, Citigroup and Deutsche Bank are lead managers for the deal via Abbey's Holmes 2006-1 vehicle. Pricing is expected this week.

From the continent, dealers began marketing Beluga Master Issuer Series 2006-1, the 4 billion Dutch RMBS, which is the inaugural RMBS transaction from Fortis' new master trust program, Beluga. The trust will be backed by loans originated by Fortis Hypotheek Bank with loan to value of 83.5% and 2.3-year seasoning.

The sterling denominated pipeline continued to build with two new CMBS deals announced last week: the GBP1.15 billion ($219 billion) White Tower 2006-3 from Societe Generale and the GBP815 million Hercules deal from Barclays' Eclipse program.

Guidance was issued on Taurus 2006-2, the GBP447.2 million U.K. CMBS backed by eight commercial real estate loans. The GBP364 million triple-A rated Class A notes were talked at a spread of 19 to 20 basis points, the double-A rated Class B notes at were talked at the 30 basis point area, the single-A rated Class C tranche was talked at a spread of 50 to 52 basis points and the Class D notes were talked at the 90 basis points area.

Dealers began marketing the 2006-2 and 2006-3 Series of Turquoise Card Backed Securities, a new credit card securitization backed by U.K. MasterCard and Visa credit card accounts held by issuer and lead underwriter, HSBC. The size of the deal is subject to change and will be determined by investor demand.

CDO spike

On the CDO side, underwriters announced Mare Baltic Plc 2006-1, the 289 million equivalent static cash CLO, a further issue out of the 1 billion structured note program, Mare Baltic Pcc Ltd. The collateral consists of loans to Danish commercial and savings banks. HSH Nordbank is managing the transaction.

Price guidance was issued the 410 million European leveraged loan CLO from Egret Capital, Egret Funding CLO 1. The 289 million 9.3-year triple-A rated Class A notes were talked at the 24 basis point area, the 11.2-year double-A rated Class B tranche was talked at 40 basis point area, the 11.5-year Class C notes were talked at a spread of 60 to 65 basis points, while the other two 11.5-year tranches, Class D and Class E, were talked at a spread of 155 basis point area and 400 basis point area, respectively.

On the SME CLO side of activity, guidance was issued on the 630 million Spanish SME securitization GC FTPYME Pastor 4. The 260 million triple-A rated Class A1 tranche was offered at a spread of five basis points area, the other triple-A rated tranche, Class A2, was talked at the 13 basis point area, the five-year Class B notes was talked at the 20 basis point area, the Class C tranche at the 30 basis point area, the triple-B rated Class D notes were talked within the mid 50 basis points and the Class E tranche were talked at the low 200 basis points.

Price guidance was also released for the one publicly offered tranche of Lusitano SME 1, the 871 million Portuguese SME CLO backed by loans originated by Banco Espirito Santo. The 4.7-year 760 million triple-A rated Class A tranche was talked at a spread of 15 basis point area.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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