Routes for restructuring

In light of concerns about volatile market prices and potential rating downgrades, Asian insurers and banks are considering giving their collateralised debt obligation portfolios a facelift. What are the pros and cons of doing so? By Georgina Lee

Asian insurance companies and banks that have built up large positions in structured credit instruments, such as collateralised debt obligations (CDOs), have suffered large mark-to-market (MtM) losses from their exposures. While some institutions have already made early exits from their positions and taken real losses, the vast majority remain unsure about what to do with their outstanding positions.

Restructuring - where a portfolio receives a capital injection and/or is re-jigged in respect of