CPDOs: the real driver of credit rally?

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A number of parties are blaming the sharp contraction in credit spreads since late September - the iTraxx index has tightened in from 30.4 basis points on September 25 to 22.69bp by November 3 - on the latest invention in the synthetic credit market: the constant proportional debt obligation (CPDO).

Developed by ABN Amro in July, the CPDO has become the most heavily debated new instrument in the credit market for several years. Some parties say the development of CPDOs represents the biggest

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