Tools of the trade

Single-tranche CDOs are becoming more popular with Asian investors, and to win the business in an increasingly competitive market, banks are rolling out technical tools to help investors build and monitor their portfolios. Mia Trinephi reports

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The collapse of Italian food company Parmalat at the end of last year was just another reminder to investors about the downside of static-pool synthetic collateralised debt obligation (CDO) portfolios, and, conversely, emphasised the flexibility and versatility of single-tranche CDO transactions. Unlike static-pool portfolios, single-tranche CDOs are constructed for individual investors. Clients are allowed to have a say on the composition of the portfolio, meaning it is tailor-made to fit their

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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