Main findings: 

• In Q1 2018, EUR 57.4 billion of securitised product was issued in Europe, a decline of 22.7% from Q4 2017 but an increase of 42.7% from Q1 2017.
  
  Of the EUR 57.4 billion issued, EUR 31.5 billion was placed, representing 55.0% of issuance, compared to the 42.6% of issuance in Q4 2017 and the 42.0% of issuance in Q1 2017.
  
  CLO refinancing (“refis”) activity continued in the first quarter of 2018; according to Thomson Reuters LPC, the combined amount of European CLO resets and refinancings totalled EUR 4.3 bn in Q1 2018 (from EUR 4.8 bn in Q4 2017).
  
  More notable was the debut sukuk UK RMBS deal from Al Rayan in February 2018, Tolkien Funding Sukuk 1.
   
• Outstanding volumes declined slightly to EUR 1.20 trillion outstanding at the end of Q1 2018, a decline of 2.3% QoQ and a decline of 3.9% YoY.
   
• Credit quality: In Europe, upgrades outpaced downgrades in Q1 2018, with upgrades concentrated in European CMBS and prime RMBS.
   
• European asset backed commercial paper (ABCP) issuance was EUR 68.2 billion in Q1 2018, a decline of 9.1% QoQ (from €75.0 billion in Q4 2017) and a 17.1% decline YoY (from €82.3 billion in Q1 2017). Multiseller conduits continue to dominate as the largest category of issuer in the ABCP market, particularly from France.
   
• Regulatory update: After the publication of the “Simple Transparent and Standardised” (STS) securitisation Package in the Official Journal of the EU on 28 December 2017, the attention has turned now to the implementation and development of the related secondary legislation, including technical standards and guidelines.
  
  Solvency II: On 15 April 2018, the EC draft delegated regulation on Solvency II revision was published for a short consultation and it has been subsequently adopted by the EC on the 1 June 2018. Although there have been some positive developments in terms of lowering the capital charges for the STS senior positions (which are now comparable to those applying to corporates), the treatment of non-senior STS tranches and non-STS securitisation remains highly problematic and does not provide any incentives for insurer investors to return to the ABS market.