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ARCHIVE | Criteria | Structured Finance | CDOs: Global Synthetic Securities Criteria: Swap-Independent Synthetic Securities Jun 99
Standard & Poors, June 1999
Abstract
In the U.S., the most common type of synthetic security converts payments from fixed-rate collateral into a floating-rate security by incorporating a swap. However, there are many other types of synthetic securities currently outstanding. Some of the more popular issue types include inverse floaters, LIBOR- and federal funds-based floaters, capped or lower-of notes, range floaters, step-ups, and nondollar indexed notes. Synthetic securities generally have two investment characteristics: enhanced or customized interest income tied to investor-preferred indexes, or enhancement of total return for investors through creation of cash flows that depend on the performance of a selected index. Standard & Poor's rating on a synthetic security addresses the likelihood that investors will receive interest and principal in accordance with the terms...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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