It was more of a relief than a surprise last week when Moody's Investors Service confirmed that the ratings of structured finance deals displayed a higher degree of stability than corporate ratings from 1998 to 2001. The rating agency added that it expects the stability of the European structured finance markets to continue.

According to the agency's first report on the European structured finance markets, no European ABS rated by Moody's has defaulted. In fact, European ABS ratings have been marginally more stable than ABS ratings in the U.S. The 10 investment-grade European ABS transactions rated by Moody's remained stable 89.9% of the time from 1998 to 2001, with five of those showing a stability of over 95%. The U.S. ABS and corporate investment-grade figures show stability greater than 73% for nine issues rated by the agency over the same period, but none of those retained a ratings stability of 90%.

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