Giving credit its due

The credit markets claimed some high profile casualties in 2007 - but as banks turn off the flow of cheap credit, what are the opportunities for those holding a liquidity advantage - pension schemes and insurers?

The Byzantine complexity of the synthetic forms of debt that catalysed the 2007 credit crunch has resulted in sleepless nights for both bankers and regulators as they attempt to divine the full exposure that financial firms have to the structured credit market.

With collateralised debt obligations (CDOs) of asset-backed securities (ABS) containing as many as three tranches - each of which is formed from different pools of ABS - providing exact figures of who owes what to whom is a complex and