As the market nears the end of the first quarter 2005, European volume is down by about 30 billion ($39.4 billion) when compared to year-over-year issuance volumes of 2004. Market estimates put year-to-date volumes at 27 billion, but analysts at Merrill Lynch argue that the slow-to-develop pipeline this year could be the result of increased demand, as bankers know that investors may snap up deals before they even make it on to the radar.

"The amount of cash looking for a home is overwhelming and as spreads in the corporate bond market remain tight, the attractiveness of the ABS sector is hard to disregard," report Merrill analysts. "Deals are snapped up even before investors get the reds' and the marketing period has contracted to less than a week." As a result, oversubscription is at an all time high, and spreads continue driving tighter. In February, spreads came in about 10 to 15 basis points for triple-As and 30 to 40 basis points for triple-Bs with double-B paper least impacted by the tightening trend.

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