Rating is available when the video has been rented.
This feature is not available right now. Please try again later.
Uploaded on Mar 27, 2008
After illustrating several CDO variations, I illustrate a generic CDO and consider the key differences that give rise to the alphabet soup of collateralized debt obligations (CDOs). The key differences concern the following. Motivation: bank seeks to remove assets from balance sheet (balance sheet) or investors hire collateral manager to seek yield (arbitrage). Risk Transfer: true sale or synthetic via credit default swaps (CDS). Reference Portfolio: many different types but either "physical debt" (loans, bonds) or structured debt (ABS, CDO). Funded: do investors fund (i.e., indirectly sell credit protection to) the entire reference portfolio or only part of the portfolio