Goldman Sachs seeks to boost CDO transparency

Goldman Sachs is seeking to improve collateralised debt obligation (CDO) market transparency by making the proprietary models for cashflow CDOs it underwrites available to all subscribers of Intex CDO analytics. Intex is a widely used electronic database service for ABS, CMO, CMBS and CDO securities. Access to information on CDOs tracked by the service is currently only granted through special permissions from underwriters to a particular CDO’s investors and those negotiating to invest in a deal.

“We are not benefiting from this directly, but we think we will benefit because the market will become more liquid and will grow,” said Alex Reyfman, head CDO strategist for Goldman Sachs in New York. Goldman Sachs hopes other CDO underwriters will also follow suit and offer the wider investing public details on their CDOs on Intex. Goldman Sachs has not actively encouraged other CDO underwriters to join in the new policy to date, Reyfman said.

Reyfman cited another unilateral attempt by Goldman Sachs to improve CDO market transparency in 1999, when the bank began issuing monthly surveillance reports on its CDOs. “Other underwriters followed very quickly,” said Reyfman. Referring to the current initiative, Reyfman said: “Our experience with the monthlies makes us kind of optimistic that others will follow.”

A lack of transparency has plagued the CDO market since its inception, Reyfman said. Goldman Sachs thinks that allowing Intex users to view the cashflow mechanics and collateral behind its CDOs on a monthly basis will attract more interest in the market. For example, investors can now more easily compare tranches of different CDOs, according to Reyfman. Data on Intex can be easily downloaded into investors’ risk management systems, which is an advance over data received through Goldman Sachs’ monthly CDO reports, he said.

Intex users can now access around 40 Goldman Sachs cashflow CDOs. Reyfman said access to more deal types, like managed CDOs, could soon follow.