Rising from the ashes
The structured credit market ground to a halt in the third quarter of last year amid rising defaults in the US subprime mortgage sector. While parts of the credit market remain closed, the synthetic collateralised loan obligation market looks set for growth. Radi Khasawneh reports
Structured credit products suffered horribly as the subprime mortgage problems in the US spread throughout the capital markets in the second half of 2007. Soaring delinquencies in US subprime mortgage loans were followed by mass downgrades of collateralised debt obligations (CDOs) and constant proportion debt obligations, falling valuations in the secondary market and a squeeze in liquidity. But new openings in the synthetic collateralised loan obligation (CLO) market may bring a welcome chink
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