European securitization issuance fell 5% year over year to €102 billion at the end of 2019 and is projected to remain around €100 billion in 2020, S&P Global Ratings wrote.
"New European securitization regulations have increasingly bedded down, and should no longer hold back issuance activity in 2020," the rating agency said in a report. Uncertainties regarding the implementation of the new rules weighed on issuance early in 2019, but activity recovered toward the end of the year, it noted.
Issuance of European benchmark covered bond issuance rose 8% to €132 billion in 2019 and is expected to grow further in 2020, supported by an increase in scheduled redemptions.
S&P Global Ratings said the approaching maturity of certain issuers' borrowings from the Bank of England's cheap funding schemes may spur growth in bank-originated securitization and covered bond issuance in the U.K., though the same may not be observed in the eurozone, where the European Central Bank reopened a similar scheme to new drawdowns in late 2019.
The single-currency bloc's GDP growth is projected to slow further to 1.0% in 2020 from 1.2% in 2019, though the risk of recession appears to be declining, helped by labor market strength supporting consumer expenditure.