Synthetic collateralized debt obligation (synthetic CDO)

[sergpro]

So synthetic CDOs expose investors to less risk than normal CDOs?

[dajieda0]

who act as the underwriters?

[simonfrater]

....likely to default, as they would lose out if this happened

[simonfrater]

Ngopalakrishna, if the bank is exposed to the riskiest piece, it acts as a measure to ensure that the bank (originator) doesn't fill the asset pool with assets that are like

[ngopalakrishna]

Sorry, but it is not clear why the bank will retain the riskiest piece of the whole tranches - the equity/residual tranche!! Could you kindly elaborate pls? thank you!

[ngopalakrishna]

Sorry, but it is not clear why the bank will retain the riskiest piece of the whole tranches - the equity/residual tranche!!

[bobbouwer6]

Int he video it is mentioned that the investors are payed out of 3 sources of cash flows: 1. cds premium 2. interest on the collateral 3. the collateral itself. How ever, the collateral is only payed out at maturity. So, are the cds premium and the interest on the collateral sufficient to meet obligatiopns of the SPV towards the investors? I can hardly imagine.

[osenidot]

who would the trustee be ?

[smokenfly514]

So basically a SCDO is insurance?

[leejae]

Thanks for the explanation! It really helped out!

[fourwindsoh]

They worked great for Goldman Sachs HAHAHA

[benfnkendra02]

i just turned 21, and im trying to understand this, I feel like in terms of math I went from the caveman 1+2=3 to calculus. any suggestions on where to start for this?

[kchowta]

good one mate...thanks it was very helpful

[pussyfever]

You just say it in a subordinated clause: The CDO ist fully funded! That's essential, cause you exclude counterparty risk with issuing Credit Link Notes.

[lalocamd]

Thanks so much for this. I have gained a good knowledge of what all the NEWS is about. This reminds me of how craps is played in Vegas. Regarding your illustration - I found it very easy to follow. It reminds me of a biochemical enzyme cascade (Those are REALLY cool!!!) :)

[zwarst]

soon we shall say cd-oh dear...

[Eggy0]

There's an impending financial collapse scenario involving synthetic CDOs being highlighted in these videos:-

watch?v=Z8EHcHjsZMk

watch?v=Il1_A77OAIQ

Interested to hear the opinion of someone who understands them!

[nickstar717]

cdo is a massive scam, jus think if only 9 of the 100 big companies go bankrupt, it means DESTRUCTION for everyone. fuck i hate cdo more power to those fucked up bankers

[StevenL001]

I like the bit where you mention the 'Risk-free High Quality Asset' earning interest.

How did it earn interest exactly? Don't tell me they bought more CDO's with it!

I'm sure this all looked very smart at the time, the fact is a lot of these things are full of lemons. The only motivation was to keep the whole ponzi scheme going and make sure the bosses got another years worth of mega bonuses.

Got to hand it to them thought - this was one hell of a scam!

[bionicturtledotcom]

The high quality asset part is true, it's not the weak link. I don't disagree with your conclusion, but in order to identify good versus bad securitization (which after all is generally useful), we've got to first understand it. David

[adeptusluminati]

This has got to be the most clear explanation of CDO's I've seen, and I'm still confused. I might have to watch this another 3 times before it sinks in. I'd like to see the judges in courts trying to make sense of this insanity when the financial markets blow up in the next year and corps get sued left right and centre.

[KLguy133]

Ha , lawyers are the most innumerate dumbos I ever came across.