Growing sophistication of the CDO market
Growing sophistication has led to new types of structured finance vehicles…such as the CDO / CDS market
- Dramatic growth since 2001
- Wave of innovation which includes synthetic structures, credit default swaps, CDOs squared, CLOs, CDOs of CRE, and hybrid structures
- Rising investor acceptance reflects search for stability and extra yield
Since these transactions have high levels of complexity, issuers and investors value ratings
Source: Harrison Scott Publications / Standard & Poor’s. Does not include confidential and SIV transactions