Hunting for paper
The landscape for CDOs has changed dramatically over the past year, when the securities fell out of favour in the midst of rampant credit downgrades and defaults. Saskia Scholtes looks at the turnaround
In late 2003, investment bank UBS surprised the fixed-income markets by abandoning plans to issue a collateralised debt obligation backed by other CDOs, and liquidating the portfolio of underlying assets which the bank had accumulated for the deal.
Collateralised debt obligations are tranched securities issued by a special-purpose vehicle against a diversified pool of cash or synthetic credit exposures, such as asset-backed securities, high-yield bonds, leveraged loans or even other CDOs.
In the
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