CDO managers are turning to new types of asset-backed securities as reference entities for synthetic deals, according to panelists from Fitch Ratings. Jill Zelter, managing director, said new reference entities include residential mortgages, credit cards, agricultural loans and aircraft loans and leases.
Michael Gerity, senior director, meanwhile pointed to a recent issue made in the U.S., whereby the CDO was designed as a balance sheet deal and exclusively comprised the credits of the buyer's counterparties. Single tranche deals are also starting to reference ABS, added Zelter.
