In case your memory is blurred by everything that transpired with the CDO’s let me refresh it. The CDO was basically a collection of mortgages that were pooled, rated and then sold to investors. For the most part they were rated “AAA” by all of the rating agencies. The problem started when some of them began to have homeowners that could not meet their obligations.
Recall the financial crisis in 2008 and the first thing that will knock the head will be structured finance deals. In the last posts we have tried to put on the explanations to these structured product.
The financial media reported “At the end of last year we started to see a surge in CLO [collateralized loan obligation] issuance, and now we are going to start to see a surge in CDO issuance. These are the same instruments Continue reading “Are CLOs, CDOs returning Back !! Déjà vu 2004”