ZAIS Group, a manager of collateralized debt obligations backed by outstanding CDOs, is calling for an eBay-type seller rating for portfolio managers seeking to offload deals in the secondary market. Such a rating would prevent potential purchasers from wasting resources in scrutinizing and trying to price deals that never end up getting sold. Denise Crowley, portfolio manager, says that in many cases, vendors soliciting bids for their CDOs do not complete the sale. This is frustrating to CDO squared managers who put in work to analyze the deals. Crowley spoke at an Information Management Network conference on CDOs and credit derivatives last week in New York.
Crowley says while it is understandable that sellers want to meet reserve prices, it appears many sellers are not serious about shifting the portfolios. She proposes that the secondary CDO market could benefit from a system similar to that of eBay, in which sellers are rated by buyers. Vendors attracting negative reviews would likely see less efficient execution of their sales as they will ultimately attract fewer bidders, she adds.