The Italian Bersani Decree, which eliminates prepayment penalties on certain mortgages, has set off the highest rate of prepayments since 2000, according to Standard & Poor's. The bump is providing some lift to investors in an otherwise sluggish European ABS sector.
"I imagine that investors in Italian RMBS are very happy to be getting yields sooner than later," said one market observer. "This means they can cash out and re-invest in wider spreads. What started for them around 13 basis points to 14 basis points is now around 40 basis points and may go to 50 basis points."