CDOs reunited
Cash and synthetic collateralised debt obligations have traditionally had their own structural conventions. That is starting to change, with some synthetics increasingly resembling cash deals. Meanwhile, hybrid CDOs are becoming more commonplace. Duncan Wood reports
It's a touching story: shortly after birth, the synthetic collateralised debt obligation (CDO) was separated from its older relative, the cash CDO, and taken along a very different path. The two types of CDO developed distinct structural conventions, appealed to different groups of investors, and were often arranged by separate teams within investment banks, each with its own head presiding over parallel ranks of structuring specialists. To all intents and purposes, cash and synthetic CDOs lived
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