Senior tranches of vanilla ABS and RMBS deals in Europe should continue to benefit from the flight-to-quality mentality that has recently held sway in the continent, analysts from the Royal Bank of Scotland said Tuesday in an asset-backed strategy report that provides an outlook for 2012.

A recurring theme in the report is the tight relationship between the European banking system and the securitization market. "The funding/liquidity stance, rating direction, and deleveraging agendas of banks will remain powerful forces shaping the outlook of structured finance in 2012 and beyond," the RBS analysts said.

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