More NewsEuropean CDO Market To Continue Growing In 2003

European CDO Market To Continue Growing In 2003

The European collateralised debt obligation (CDO) market experienced yet another year of dramatic growth in 2002 with innovation a key feature. Growth is set to continue in 2003, albeit possibly at a slower pace, says Moody’s Investors Service in its 2002 Review & 2003 Outlook report. ‘The total market volume of credit risk transferred reached US$183 billion (EUR182 billion) in 2002 – a 42% growth in volume over 2001,’ says Katherine Frey, author of this report. The overall growth in the market was the result of a strong rise in synthetic CDOs (a 45% increase in the number of rated deals), rather than in cash deals, a segment that hasn’t grown despite some prominent innovations. Approximately 96% of the deal volume and 85% of the number of deals were issued in synthetic form in 2002, making European CDOs essentially a synthetic market. ‘Most notably, managed synthetic transactions took off during the year after arriving on the scene at the very end of 2001 – Moody’s rated 38 synthetics which allow for substitution, including fully managed deals, in 2002,’ Frey noted.

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