The advent of the International Swaps and Derivatives Association's pay-as-you-go template for credit-default swaps on asset-backed securities has allowed more portfolio managers to use synthetic ABS, but managers say it is a struggle to fill buckets of CDS on ABS. "The names in the index became the only names you are able to source synthetically," said Steven Kolyer, partner and head of the financial products group at Clifford Chance in New York. The challenge is to fill synthetic buckets with different names from those in the index and thereby differentiate each collateralized debt obligation from both the index and structures offered by competitors.
Managers Struggle To Fill Synthetic Buckets
