A crop of new investment vehicles sprouting up around Europe could add up to $40bn (€44bn) worth of demand for corporate and asset-backed securities. But while this could further spur the development of European credit markets it could also have a distorting effect on how risk in the market is priced.

Ratings agency Standard & Poor's has rated five new structured investment vehicles in the last year and expects to rate another three before the end of 2000. The vehicles are backed by banks including Banc One, Bank of Montreal, Halifax and Rabobank, as well as by investment managers such as Quadrant Capital and Triple i Offshore.