European RMBS is increasingly being offered with a Basel II call option, researchers at Morgan Stanley report in a report last week, and if Basel II drives a more efficient RMBS structure - as market talk indicates - it might motivate issuers to call.

"Bonds are currently priced to expected maturity, but we suggest that as Basel II gets closer, investors will pay more attention to the call," the report says. "Depending on the spread environment, we believe that such bonds will trade at lower premiums to those without the call language."

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.