Worth the trouble?

Collateral managers

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During the managed synthetic collateralised debt obligation (CDO) structure’s two-year existence, dealers’ credit derivatives desks have pitched it to investors as the best way to get a leveraged credit exposure, while being able to sidestep credit blow-ups. When deliberating between a managed and static structure, investors are keen to know what impact a manager will have. But despite a steady deal pipeline (see figure 1), there remain no concrete answers. Even the rating agencies don’t know.

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