NewSmith uses option redemption on CDO

New angles

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When it comes to realising value from a vintage collateralised debt obligation (CDO) with negative ratings drift, some might think it easier to extract blood from a stone. However, London-based NewSmith Financial Solutions completed the unwinding of a $1 billion CDO in September, without the investors taking a loss.

The corporate advisory firm was working on behalf of an insurance company, a major investor in the equity tranche of a CDO brought to market in 2002 by Hartford, Connecticut-base

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