Fitch Ratings projected on Thursday that structured finance issuance in Europe would, in the aggregate, stay flat in 2013 from 2012.

But there is a silver lining: the mix of investor-placed deals versus retained ones should keep shifting towards the former. Originators that "retain" their deals are typically banks seeking to use them as collateral against funding from the European Central Bank. They are a symptom of a market that is not fully functional.

Fitch’s forecast for issuance in 2013 is broadly at €200 billion ($266 billion). While this is more or less in line with last year, investors are expected to snap up 40% of the total, from 35% in 2012 and 31% in 2011.

Keeping overall issuance in check is sluggish origination, which in turn, is a product of economic slowdown, tighter lending criteria among banks, and, in some corners of the Europe, sliding home prices. Moderate refinancing needs and new regulations are dampeners as well, the agency said.

Fitch suggested that U.K. RMBS could push the overall issuance in either direction this year, as it is still not entirely predictable how much the government’s Funding for Lending Scheme will deter banks from securitizing their mortgage portfolios.   

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