The weakness in the U.S. markets may have European securitization participants apprehensive, but it has not been reflected in European ABS market spreads, which have proved resilient and, by some accounts, relatively immune to last week's global volatility. There are some signs that a softer tone is beginning to creep in at the triple-A level, but industry sources said it is nothing dramatic and there hasn't been any panic selling, yet.
Monday morning's bearishness led to further retrenchment in the ABX index with U.S. home equity lenders' share prices also reaching new lows, but the selloff continues to be very isolated, and has not negatively impacted spreads in the European ABS sector. Reports from Dresdner Kleinwort indicated that triple-A spreads still appear finely balanced, and that there is good appetite for paper, particularly at the yieldier end of the spectrum. However, analysts added that the market was seeing spread levels that indicated some resistance to vanilla product.