Seduced by CDOs

The insurance arm of the Italian Post Office has been the country’s leading issuer of capital-guaranteed equity investments based on CDOs – portfolios of securitised debt. But when the underlying CDOs were downgraded, the retail products suffered too

Cat on an Italian post box

Many thousands of Italian retail investors bought into the Programma Dinamico series of 10-year capital-guaranteed equity retail products sold by Poste Vita, the life insurance division of Poste Italiane, in 2001 and 2002. If they read the marketing material thoroughly, those investors would have known their investments were based on more than €2 billion of highly complex single-tranche bespoke synthetic collateralised debt obligations (CDOs).

While retail CDOs have gained a strong foothold in

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