Chapter 9. Synthetic CDOs
Since their appearance in 1997, synthetic collateral debt obligations[1] have become very popular and have been the most fertile area for growth and innovation in structured credit markets. They have contributed to – as well as benefited from – explosive growth in the use of credit default swaps (CDS). From their initial application as a means of risk transfer from bank balance sheets to manage regulatory capital requirements, they now encompass every facet of credit risk covering a wide range of assets from corporate bonds and loans to structured finance obligations and CDO tranches themselves.
Given that the bulk of CDO issuance takes place in private transactions, the amount of public data is limited.
What are Synthetic ...
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