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ARCHIVE | Criteria | Structured Finance | CDOs: CDO Spotlight: U.S. Cash Flow CDOs Increasingly Turn To CP Funding; Criteria Provided Jul 05
Standard & Poors, July 2005
Abstract
For the past two years, the U.S. cash flow CDO market has experienced a proliferation of cash flow ABS CDOs that tap into the CP market to provide funding for traditionally 'AAA' tranches. The high demand for this structure is driven mainly by the desire of traditional ABCP investors for high credit quality collateral and competitive yields, and the aspiration of CDO managers to lower the funding costs of CDOs. Cash flow CDOs that issue CP tranches generally have third-party liquidity support for 100% of CP principal. The collateral for this structure consist mainly of high investment-grade ABS and CDOs. The minimum rating of collateral is usually 'A', with a distribution of approximately 25%, 50%, and 25% of the invested...
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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