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Briefing
Collateralized Debt Obligations (CDOs) and Structured Products
Appears in:
Advanced Economies, North America, Finance and Banking, Macroeconomy, Financial Regulation, Securitization and Structured Finance, Systemic Risk, Vulnerabilities and Asset Bubbles
Critical Issues
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Background:
Collateralized debt obligations (CDOs) are a form of asset-backed security (ABS). CDOs derive value from a pool of underlying fixed-income assets (i.e. assets yielding recurring, fixed payments), and are sorted by risk level into "tranches" or "slices." The market for CDOs was severely shaken during the financial crisis of the late 2000s due to credit market turmoil. The main issues with these products are regulatory arbitrage, changing correlation patterns that transform assumed diversification benefits into risk concentrations, and a higher inherent exposure to systematic risk than previously assumed.
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Associated Readings
News
Financial Times
Feb 10, 2009
Half of all CDOs of ABS failed
Analysis
SIFMA Securities Industry and Financial Markets Association
Feb 01, 2009
Global CDO Market Issuance Data Q1/2004 - Q4/2008 by Type, Unerlying Collateral, Currency
Analysis
BIS Joint Forum
July 2008
Credit risk transfer – developments from 2005 to 2007
Blogs
SeekingAlpha.com
Oct 21, 2008
In the Year 2010: Will CDOs Still Exist?
News
Bloomberg
Aug 21, 2008
Subprime Mortgage Bonds Lead `Extinct' Credits, Moody's Says
Analysis
FinancialWeek/Reuters
Jun 10, 2008
S&P president: Structured finance biz not coming back for years
Analysis
Financial Times
Aug 19, 2008
Plummeting value of synthetic CDOs demand action
Analysis
Bloomberg
Aug 19, 2008
CDO Default Events Accelerate With New `Wave,' JPMorgan Says
Blogs
FT Alphaville
Jul 08, 2008
The Re-Remic gimmick?
Analysis
Aite Group
May 21, 2008
Report: Securitization will survive, but the arbitrage ABS CDO business will not
Analysis
Bloomberg
Apr 15, 2008
Swaps Tied to Losses Became `Frankenstein's Monster'
Blogs
FT Alphaville
Jan 09, 2008
25 CDOs to meet their maker; billions poised to liquidate
Research
Stanford University
Jun 18, 2007
Innovations in credit risk transfer: implications for financial stability
Analysis
Fitch Ratings
Sep 21, 2007
CDO Asset Management in a Time of Illiquidity (free login)
RGE Writings
RGE Monitor
Jan 07, 2008
RGE Structured Finance Glossary – Making Sense of the Alphabet Soup
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