Adding complexity
CDOs of CDOs are becoming more popular, particularly among Japanese investors, but dealers warn that the complexity of these products means that they are only suitable for a handful of the most sophisticated investors. Nick Sawyer reports
Synthetic arbitrage collateralised debt obligations (CDOs) are still the rage in Asia. In the past few months there’s been a string of new deals, with the most recent entrants – Singapore’s OCBC Bank and Hong Kong-listed China Insurance International Holdings – both launching $1 billion managed synthetic deals in mid-November.
But with the region’s investors becoming more comfortable with synthetic CDOs, a number of banks are looking to the next stage of development – CDOs of CDOs. This is
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