Weighing up the risks and rewards of CDOs
The expanding CDO universe has increased its diversification during the past few years. This should translate into more robust credit quality and a reduced risk of downgrades, though some commentators question the link between diversification and performance
A conspicuous trend in the CDO market, and one that gathered pace in 2004, was the sale of notes to a much broader range of investors than before, with pension funds, insurance companies, private banks and high-net-worth individuals all becoming increasingly active participants.
Among those CDO managers that have been at the forefront in promoting the increased diversity of the market is Axa Investment Managers. Its $3.5 billion Overture CDO, issued in 2003, established a new benchmark by being
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