Market Environment According to Eurostat, GDP rose by 0.4% q/q in the Euro Area and the EU28 in the first quarter of 2015. According to the April 2015 European Central Bank lending survey, banks continued to report easing of lending standards in the first quarter. Lending standards eased to a greater extent for small-and-medium enterprises (SMEs) than for large enterprises. Short-term loans standards also continued to ease to a greater extent than longterm loan standards. Competition between banks was far and away the strongest factor in easing lending standards, although bank liquidity positions and market financing contributed to a lesser extent. Net loan demand also rose in the first quarter, albeit to a lesser degree than in the prior quarter. The need for working capital and debt restructuring were the most influential drivers of greater demand, constrained by debt issuance and internal financing.

Highlights European leveraged finance issuance (leveraged loans and high yield bonds) more than doubled in 1Q’15 to €57.7 billion, a 112.8% increase quarter-over-quarter (q-o-q) and a 25.2% increase year-over-year (y-o-y). The increase q-o-q stems from the large rise in high yield bond issuance, which more than quadrupled in the first quarter of 2015; the high yield share of the leveraged finance market in-creased to 61.2%, up from 30.4% in 4Q’14. Market and Economic Environment According to the April 2015 European Central Bank lend-ing survey, credit standards for loans to enterprises, con-sumer credit and loans to households other than for house purchase continued to ease in net terms in the first quarter of 2015, while the credit standards for loans to households for house purchase tightened slightly in net terms. Despite the easing in most categories during the quarter the European Central Bank stated that the level of credit standards is still relatively tight in historical terms. In 1Q’15, euro area banks reported a net easing of credit standards on loans to enterprises for the fourth consecu-tive quarter driven in particular by banks’ cost of funds and balance sheet constraints and competition. Across firm size, credit standards were eased on loans to both large firms and small and medium-sized enterprises (SMEs). Credit standards on loans to enterprises have im-proved in all large euro area countries except for Spain, in particular in Italy, and switched from a net tightening to a net easing in the Netherlands. Net loan demand continued to be positive for loans to en-terprises, but fell back from the high level reported in the fourth quarter of 2014. Net demand for loans to enter-prises continued to improve, however at a slower pace. The net increase in demand was 6% in 1Q’15, down from 18% in the previous quarter. Net demand for housing loans continued to increase at a fast pace (29%, up from 24% in the previous quarter), while it remained broadly stable for consumer credit (13%, after 14%).

In Q1 2015, EUR 33.9 billion of securitised product was issued in Europe1, a decrease of 43.1% from Q4 2014 (EUR 59.6 bn) and a significant increase of 70.4% from Q1 2014 (EUR 19.9 bn)2Of this, EUR 18.2 billion was placed, representing 53.7%, compared to EUR 24.1 billion placed in Q4 2014 (representing 40.4% of 59.6 EUR bn) and EUR 14.6 billion placed in Q1 2014 (representing 73.4% of 19.9 EUR bn)In Q1 2015, UK RMBS led placed totals followed by Pan European CLOs and Dutch RMBS: UK RMBS decreased from 6.5 EUR bn in Q4 2014 to 5.4 EUR bn in Q1 2015; Pan European CLOs decreased from 4.3 EUR bn in Q4 2014 to 2.8 EUR bn in Q1 2015; Dutch RMBS decreased from 2.6 EUR bn in Q4 2014 to 2.4 EUR bn in Q1 2015.

Market highlights and commentary According to Eurostat, GDP rose by 0.3% quarter-overquarter (QoQ) in the EU 19 and the EU 28 for the fourth quarter of 2015, unchanged (EU 19) or down slightly (0.4%, EU 28) from the prior quarter. Term Issuance and Outstanding VolumesIn Q4 2015, EUR 71.4 billion of securitised product was issued in Europe, an increase of 25.0% from Q3 2015 (EUR 57.1 billion) and an increase of 19.3% from Q4 2014 (EUR 59.8 billion). Of the EUR 71.4 billion issued, EUR 15.5 billion was placed, representing 21.7% of issuance, compared to EUR 18.1 billion placed in Q3 2015 (representing 31.8%) and EUR 24.3 billion placed in Q4 2014 (representing 40.6%). For the full year, EUR 213.7 billion of securitisations were issued in Europe, a decline of 1.5% from the prior year. Of this, EUR 81.5 billion were placed, representing 38.1% of totals, an improvement from the EUR 78.2 billion (36.0%) of securitisations placed in 2014. For the fourth quarter, UK RMBS continued to lead placed totals (EUR 6.1 billion), followed by European CLOs (EUR 3.5 billion) and German auto ABS (EUR 1.6 billion). For the full year, placed issuance broadly reflected the same trends, with UK RMBS leading placed totals (EUR 20.1 billion), followed by PanEuropean CLOs (EUR 13.7 billion), and German auto ABS (EUR 11.4 billion). Net issuance of securitised product remained negative, with EUR 1.25 trillion outstanding at the end of 4Q’15, down from EUR 1.33 trillion at the end of 3Q’15. Of this, EUR 690.4 billion, or 55.4%, were retained.

Highlights Equity underwriting in European exchanges accumulated in 2015 a total of € 201.5 bn in proceeds, an increase of 16.7% from the value observed in 2014 (€ 172.7 bn). Equity underwriting encompasses Initial Public Offerings (IPOs), convertible securities and follow-on offerings. Mergers and Acquisitions (M&A) between European companies (as acquiring and target companies) totalled € 396.9 bn in 2015, an increase of 11.9% from the value observed in 2014 (€354.6 bn). Equity trading activity in European exchanges and MTFs accumulated in 2015 a total of € 13.1 tn in turnover value, an increase of 28.7% from the value observed in 2014 (€ 10.2 tn). Market capitalisation of European shares stood at € 11.9 tn at the end of 2015, an increase of 15% in Euros from the value observed in December 2014 (€ 10.7 tn).

Preface The legislative cycle after the 2014 European elections should be focused on long-term growth. As the new EuropeanCommissioners and MEPs look forward to the next five years, they have a key task – to introduce legislation that promotessustainable economic growth in Europe, so reducing unemployment and debt through improving the structure of the pan-European economy. Substantial progress has been made in establishing a framework of financial regulation that reduces the risk of the bankingsystem endangering the economy again. As that framework moves from legislation to implementation, it is time to focus onaddressing the growth agenda. The European Commission acknowledges in its ‘roadmap to meet the long-term financing needs of the European economy’,1that the funding model needs to be improved. Europe is too reliant on its banks for funding and needs to develop its capitalmarkets in order to improve the availability and cost of finance. As the Commission says,if long-term growth is to be improved, then companies need better access to large andliquid capital markets. This paper highlights the potential for high-quality securitisation in Europe to play apart in unlocking jobs and growth. Yet for it to do so, the proposed regulatory frameworkneeds to be sensibly calibrated – recognising risk, but also taking into account the strongperformance of high-quality securitisation in Europe over the past few years. We welcome the support of central banks and policymakers in calling for a revival ofhigh-quality securitisation, and stating that a revived and sustainable securitisationmarket would contribute to lower cost of capital, higher economic growth and a broaderdistribution of risk. In our view, there is an urgent need for coordinated action to revive securitisation. It would be a first step in helping Europe’sbanks fund their customers more efficiently. It would broaden the range of tools available to help them manage and transferrisk. And it would also help rebalance Europe’s financial system by widening and deepening its capital markets. Simon LewisChief Executive, Association for Financial Markets in Europe 1. Commission roadmap to meet the long-term financing needs of the European Economy, 27 March 2014