Emerging market CDOs

10. EM CDOs

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Emerging market debt has not historically been regarded as the most suitable asset class for CDOs for a number of reasons. Firstly, emerging market debt is an asset class in which correlation between reference entities is very strong, diluting the benefits of an apparently well-diversified portfolio. That correlation was clearly observed in crises such as those that befell Mexico, Russia and Argentina.

A second factor that has frustrated the development of emerging market CDOs has been the re

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