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- Title
ABCs of Synthetic ABS.
- Authors
O'Connell, Edward J.; Goodman, Emily H.
- Abstract
With the popularity of cash collateralized debt obligations (CDOs), the underlying financial assets have been in short supply and managers have had difficulty finding collateral. Acquiring desired assets synthetically is an attractive alternative-hence the growth of synthetic CDOs. This article examines the emergence of a market for synthetic CDOs. The authors look at various types of synthetic CDOs, with particular attention to synthetic CDOs that reference asset-backed securities (ABS). The authors also address the recent efforts of the International Swaps and Derivatives Association (ISDA) to standardize documentation for credit default swaps that reference ABS (which are the building blocks of synthetic CDOs of ABS) and how this development will affect the synthetic CDO market. The publication of standardized documentation and the launch of a new ABS CDS index should lead to further growth of the market for synthetic CDOs of ABS.
- Subjects
COLLATERALIZED debt obligations; ASSET backed financing; INTERNATIONAL Swap Dealers Association; CREDIT derivatives; DERIVATIVE securities
- Publication
Journal of Structured Finance, 2006, Vol 12, Issue 1, p6
- ISSN
1551-9783
- Publication type
Article
- DOI
10.3905/jsf.2006.628542