Secondary Market for Buying and Selling Collateralized Debt Obligations - CDOs, CLOs and other Asset-Backed Securities (ABS)

Collateralized Debt Obligations

Market Description

Collateralized Debt Obligations (CDOs) are structured fixed-income and equity securities backed by a variety of assets including corporate loans, bonds, residential and commercial mortgages and other asset-backed securities. CDOs can also include synthetic exposure to these assets through credit default swaps. CDOs are securitized products issued out of a special purpose vehicle or trust structure, with a variety of tranches issued that vary in seniority, coupon rate and credit quality. It is estimated that approximately $1 trillion in face value of CDO securities remain outstanding. Largely intended to be buy-and-hold securities, CDOs were generally issued on a 144A or Reg S basis, with limited information available for a buyer to accurately determine pricing in the secondary market. When they have traded, CDOs have traditionally traded over-the-counter (OTC) among a scattered array of dealers around the globe - usually only with the dealer who originally underwrote the CDO. Due to the insolvency and financial instability of the traditional large dealers, virtually no secondary trading market exists. Currently, investors have nowhere to turn to find buyers for their troubled CDO investments. SecondMarket has leveraged its state-of-the-art technology, deep buyer and seller bases, and centralization of data and analytical tools to create an independent marketplace for a wide variety of CDO types including cash & synthetic CDOs of ABS, loans, bonds, hybrids, synthetics and CDO-squared.

Jan 12 2010

CLO Eligibility Criteria Questioned — www.structuredcreditinvestor.com

Trustee BNY Mellon has informed the issuer of the Bacchus 2006-1 CLO that there may be an event of default forthcoming
The EOD would be based on non-compliance of the collateral management agreement
This agreement prohibited purchases of CDOs at a price of less than 90, and this clause may have been breached
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Dec 18 2009

Mid-Market manager scores 2009 first with “brand new” CLO — www.creditflux.com

NewStar Financial has priced the first new middle market CLO this year
The deal is called NewStar Commercial Loan Trust 2009-1 and was arranged by Wells Fargo
Guggenheim is said to have purchased the class B single A notes
The deal priced on Tuesday and closes on January 7, 2010

Dec 18 2009

Ex-TCW team forms new advisory — www.structuredcreditinvestor.com

Former TCW CIO Jeffrey Gundlach has formed DoubleLine, a new investment advisory company
He was recently dismissed from TCW, and more than 30 other members of his team left with him
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