Static synthetic collateralized debt obligations issued in Europe are being arranged purely to capture rating arbitrage, and the structures are likely to die off completely. Credit officials say managed CDOs have taken center stage (DW, 11/4/05) and investors are not comfortable with arrangers taking the constraints of rating agencies and stretching it to the limit on static portfolios.
"In my opinion, static CDOs are dead," one CDO structurer at a top tier firm in London told DW on the conference sidelines. A number of static transactions to hit the market this year have been on the back of the change in Standard and Poor's rating methodology, which has injected value into investment-grade CDO tranches (DW, 1/13).
