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The Great CDO Unwind

October 31, 2008

Analysis of:CDO Cuts Show $1 Trillion Corporate-Debt Bets Toxic | www.bloomberg.com

Now that CDOs are being unwound there is some interesting information emerging about the scale and structure of the CDO market. It is becoming clear how big a part the structured credit boom played in keeping credit spreads so low for so long. More evidence is also emerging how the rating structure of CDOs could have lead to higher risk collateral. Analysing the CDO unwind process, as it is being played out through widening credit spreads and rating downgrades, gives some insight into the current level of credit pricing vis-à-vis the deteriorating economic outlook.

Lehman CDS Settlement – The Dog that Didn't Bark?

October 28, 2008

Analysis of:Barclays Won't Take Losses on Lehman Settlements | www.bloomberg.com

In the days following Lehman’s bankruptcy, it was widely predicted that the CDS settlement process would cause intolerable strains on the financial system. In fact, it seems to have been an orderly process, which should assert the robustness of the CDS market in the face of its most vehement critics. However, the publicly available information leaves interesting unanswered questions which have important implications for the structure and functioning of the CDS market.

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