Synthetic CDO issuance surge forecast

A further surge in static and managed corporate synthetic collateralised debt obligation (CDO) issuance is expected this year, according to new research by Bank of America. The US bank made the prediction using its proprietary ‘return-on-equity barometer’ measure – an index of both volumes and the attractiveness of buying CDO equity in the new issues market. It estimated that the internal rate of return on synthetic investment-grade CDOs has reached 45.9% and 34.6%, assuming a 0.25% and 1%

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