With another record year under its belt, the U.K. RMBS master trust looks ready to lead another year of strong RMBS volumes - but have the worsening economic conditions finally put these structures to the test?

According to JP Morgan Securities, pricing on the latest jumbo U.K. RMBS deal, Northern Rock's Granite, has provided indicative spread levels for the benchmark mortgage-backed sector: Granite's five-year triple-A Euro- and Sterling-denominated paper came at 24 basis points over the three-month Libor, two to five basis points behind pricing levels seen at the end of third quarter 2002. Five-year triple-Bs are now at 145 basis points over three-month Libor, pricing 20 basis points behind 2002 third quarter levels.

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