CDOs in the Financial Crisis

Abstract

Assets underlying collateralized debt obligations (CDOs) have been hit particularly hard by the credit crisis. Newissuance activity for CDOs has dropped dramatically, and liquidation, restructuring, and litigation scenarios have become increasingly commonplace. The author describes common issues that troubled CDOs are facing and offers an overview of some of the legal issues and provisions in indentures that are being discussed in the CDO marketplace. The article also points out that distressed asset sales undertaken by liquidating CDOs may offer opportunities for savvy investors.

TOPICS: CLOs, CDOs, and other structured credit, financial crises and financial market history