European ABS: Will it end in tiers?

As part of a special focus on asset-backed securities, we take a look at the European ABS market. After a prolonged period of spread compression, credit tiering may be making a return to the market, as Alan McNee reports


The asset-backed securities (ABS) market has been growing dramatically for the past few years, with issuance in Europe overtaking corporate bonds for the first time in 2004. This growth has been driven by strong investor demand, but the process has occurred in a mostly benign credit environment. The market has yet to be tested in an economic downturn. With the likelihood of tougher times for credit ahead, how well will ABS cope?

As with other credit instruments, spreads in the ABS

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