"If we look at the broader market, across all asset classes, spreads have been tight but there is still a lot of value to be found in European ABS against other asset classes," said a participant at the panel called Relative Value In European Structured Credit Markets: Yield PickUp or Total Return?
Smaller banks may begin to feel squeezed as further tightening is still expected on the triple-A level. In CMBS, expect to see more volatility on the U.S. side where underwriting standards have slipped. Panelists said they are more bullish on European CMBS. Generally, the RMBS market looks pretty sound. Recent issuance levels have triggered spread widening on Spanish paper, particularly on the secondary and, as a result, the market could experience some prepayment volatility.