Signs of life in the secondary market

With around $600 billion of collateralised debt obligations (CDOs) outstanding, dealers want to kick-start a secondary market. Until a few months ago, pricing issues and the reluctance of participants to take CDO risk had hindered it. But now secondary volumes are growing. What has changed? By Sarfraz Thind

New issuance in the collateralised debt obligation (CDO) market has ground to a near halt in the past six months. There were only 10 new US issues in the first quarter of this year, compared with 35 this time last year. Downgrades quadrupled in 2002, leaving investors increasingly jittery about CDOs. With many anticipating another record year of CDO downgrades, there is no shortage of institutions looking to shed CDO risk. Yet despite the large numbers of sellers and the attractive spreads

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