Synthetic collateralized debt obligation issuance this year far outstripped levels seen in previous years. According to Thomson Financial, global CDO issuance through Dec. 20 was valued at USD169.3 billion, compared with USD111.7 billion for all of last year. The charge was led by Citigroup and Merrill Lynch, with 39 issues each, worth a combined USD45 billion and 23% market share. "Issuance this year went through the roof," said one CDO research analyst. A credit derivatives trader added, "We are seeing a deluge."
Several factors seem to have contributed to the bullish trend, including a stronger-than-usual year-end rush driven by widening risk premiums and changes to Standard & Poor's synthetic CDO rating model (DW, 12/12).
