In-depth introduction: CPDOs
The brochure, dated October 2006, refers to “a breakthrough in synthetic credit investments”, trumpeting the new product’s AAA rating and claiming it has a high probability of cashing in – or earning enough during the early years of its 10-year existence to meet its obligations without needing to take any further risk.
A year later, the market for constant proportion debt obligations (CPDOs) was dead, and investors were already sitting on heavy losses.
Since then, the question has been how the
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The fine handed out by an Australian court last year to ABN Amro and Standard & Poor’s was a rare success for post-crisis litigants in structured credit cases. The victors are hoping to repeat the trick in Europe – but what are their chances? Lukas…
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