Fitch Ratings said today that the two guarantees offered under the proposed U.K. government's 2009 ABS Guaranty Scheme will likely provide additional comfort for investors from a credit and liquidity perspective.

However, the degree to which the scheme will spark new lending by improving funding conditions is uncertain as other schemes — such as the Credit Guarantee Scheme — currently offered by the U.K. government might result in competing funding options for eligible financial institutions. Under the scheme, the U.K. government will guarantee the timely payment of all amounts contractually due under the issued RMBS.

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