SPE accounting proposal threatens CDO market

The Financial Accounting Standards Board (FASB) is now considering changes to FAS 94, which sets out rules for the consolidation of subsidiaries on to their parent companies’ balance sheets.

These changes would almost certainly force some sponsors to bring their CDOs on to their balance sheets. CDOs are usually structured as SPEs, and their sponsors typically retain equity stakes in the deals they manage. But the equity portion of the CDO capital structure may not meet FASB’s proposed tests for

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