The CDO contribution

Even five years ago, CDOs were just a relatively small part of the overall credit derivatives market, and in terms of the overall financial market they were barely noticeable. Today they are still small in comparison with the overall financial market, but their contribution and importance is impossible to ignore

Credit derivatives as well as COs have not been without critics, who have bandied around words such as “toxic” or expressions like “weapons of mass financial destruction” to describe them. In his May/June 2003 newsletter, for example, Pimco’s Bill Gross warned that “unregulated hedge funds, collateralised debt obligations and poorly structured derivatives of all kinds that redistribute risk but do not eliminate it portend the likelihood of another LTCM debacle at some point.” Gross is by no