Seduced by CDOs

When is a private rating not a private rating? It’s a question that’s exercising the minds ofthe leading credit rating agencies, a seemingly grey area for structurers and distributors ofretail CDOs, and a potential hazard to the structured retail products market at large.Nicholas Dunbar reports


In the last week of July 2004, Ken Gill, head of European CDOs at Fitch Ratings, had a problem. He had just learned, as a result of conversations with Risk, that €1.55 billion of highly complex single-tranche bespoke synthetic collateralised debt obligations (CDOs) transactions privately rated by Fitch between 2001 and 2002 were not held by a single sophisticated institutional investor, as he had previously believed.

Instead, these transactions were held by many tens of thousands of

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