Restructuring reservations

Downgrades of subprime collateralised debt obligations and widening spreads have caused losses aplenty for structured credit investors. Faced with the prospect of further erosion in valuation, some have plumped for restructurings. But this is by no means a panacea. By Duncan Wood

In calmer times, the downgrades and mark-to-market losses affecting the structured credit universe would have been an opportunity for structuring whizzes to show off. Submerged trades would have been winched up to the surface, set on firmer ground and rebuilt. Instead, most have been left where they are - sunken wrecks in a stormy sea.

"This is not a normal market," says TJ Lim, global co-head of markets at UniCredit Group in London. "We have come up with many creative restructuring ideas, but