Cash vs synthetic CDOs

3. Cash vs Synthetic

p15-gif

The distinction between cash and synthetic instruments is that while in a cash CDO assets are physically removed from a bank's balance sheet, in a synthetic transaction the risk is transferred to third-party investors, with the originating bank retaining the assets. The synthetic template has been a very appealing option for banks that are attracted by the regulatory capital benefits of removing loan risk from their balance sheets while retaining ownership, which may be a requirement for a n

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: