European corporate securitizations are poised for another slow year, with bank lending remaining the financing route of choice. And volumes could be further pressured this year with a developing new trend that could see some ageing corporate deals refinished as CMBS deals in 2006.
"Traditionally, activity in this sector has been driven by private equity firms using ABS as an exit to funding ventures, but the banking market has been so buoyant and we won't see an increase in issuance until banks are less prone to issue in this area," said Alain Carron at a Standard & Poor's press conference last week in London. The relatively low interest rates and borrowing costs for European corporates in 2005 has put the heat on alternative finance in the secured and unsecured debt markets. S&P said that the total rated volume for European corporate securitizations slowed over the past 12 months. In 2005, the agency rated 23 issues for a total GBP7.9 billion ($13.9 billion), from 20 issues totaling GBP12.1 billion ($21.18) in 2004.