With European loan volume so far in 2004 at an all-time high - 35.4 billion for the first half of this year - the pipeline for European collateralized loan obligation (CLO) issuance is stronger than ever. Four European CLOs were completed in the second quarter of 2004 alone, adding to the three completed in the first quarter. And CLO activity is expected to remain just as busy or even busier through year's end, with at least eight to 10 more funds expected to emerge before 2005, said Standard & Poor's in a report on European structured finance for the second quarter of 2004.

Although CLO activity in the European market still takes place on a much smaller scale than in the U.S., this current surge in CLO issuance indicates the developing landscape of the European loan market, where institutional investors are increasingly moving into the mainstay of a market traditionally dominated by relationship banking.

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