Arbitrage, super-senior and single-tranche CDOs

4. Other CDO types

The basic technology of CDOs has appealed to a range of other market practitioners extending well beyond banks. In many cases, these other practitioners are attracted by the opportunities that CDO technology has opened up for regulatory capital relief.

Arbitrage CDOs

The stable companion of the balance sheet CDO is the arbitrage CDO, which is generally used by investment banks or specialist management companies as a highly efficient mechanism for capturing the spread difference between collateral

To continue reading...