CDO-Squared explained

CDO-Squared is an investment in the form of a special-purpose entity (SPE) with securitization payments backed by collateralized debt obligation tranches. A collateralized debt obligation is a product structured by a bank in which an investor buys a share of a pool of bonds, loans, asset-backed securities, and other credit instruments. Payments resulting from those bonds, loans, asset-backed securities, and other instruments are then passed on to the holders of the shares of the collateralized debt obligation. It is a way to invest in multiple credit instruments and diversify risk.^{[1] [2]} These instruments became popular before the financial crisis of 2007–08. There were 36 CDO-Squared deals made in 2005, 48 in 2006 and 41 in 2007. Merrill Lynch was a big producer, creating and selling 11 of them.^[3]

The collapse of the market for collateralized debt obligations and CDO-Squared contributed to the 2008 subprime mortgage crisis. Goldman Sachsappears to be the last bank to hold CDOs-Squared, holding $50 million (~$ in) in June 2018.^[4]

2004

• Abacus 2004-2
• Abacus 2004-3
• ACA 2004-1
• Cascade Funding I
• Crystal Cove
• Davis Square Funding III
• Dunhill
• E-Trade III
• Glacier Funding I
• Glacier Funding II
• Independence V
• Jupiter High Grade
• Lakeside II
• Sierra Madre Funding

2005

• Abacus 2005-1
• Abacus 2005-2
• Abacus 2005-3
• Abacus 2005-5
• Adirondack 2005-1
• Altius I Funding
• Broderick 1
• Camber 3 Plc
• Class V Funding
• Coolidge Funding
• Davis Square Funding IV
• E-Trade IV
• Fort Sheridan
• Glacier Funding III
• G Street Finance
• Huntington
• Independence VI
• Jupiter High Grade I
• Jupiter High Grade II
• Jupiter High Grade III
• Khaleej II
• Kleros Preferred Funding
• Lenox
• Lexington Capital Funding

2006

• Auriga
• Bernoulli High Grade I
• Broadwick Funding
• Broderick 2
• Class V Funding II
• Commodore V
• Davis Square Funding VI
• Fortius II Funding
• GSC 2006-2m
• Hout Bay 2006-1
• Hudson High Grade Funding 2006-1
• Hudson Mezzanine Funding 2006-1
• Independence VII
• Ipswich Street
• Jupiter High Grade IV
• Kleros Preferred Funding II
• Kleros Preferred Funding III
• Kleros Real Estate I
• Kleros Real Estate II
• Kleros Real Estate III
• Libertas Preferred Funding I
• Octans I
• Pampelonne I
• West Coast Funding I

2007

• Abacus 2007-AC1
• Glacier Funding V
• Newbury Street
• Norma I
• Point Pleasant 2007-1
• Timberwolf 1
• Vertical 2007-1
• Volans

^[5]

Sources

• Adams . Andrew . Bhatt . Rajiv . Clunie . James . The Risks in CDO-Squared Structures . Multinational Finance Journal . 1 June 2009 . 13 . 1/2 . 55–74 . 1096-1879 . 10.17578/13-1/2-3 .

Notes and References

1. Web site: CDOs-Squared Demystified . Nomura Fixed Income Research . 2005 . 2018-10-04 .
2. Web site: Collateralized Debt Obligation (CDO-Squared) Overview . 2024-11-28 . Investopedia . en.
3. The Financial Crisis Inquiry Report, 2011, p.203
4. Web site: Woodall . Louie . Goldman Sachs is last major bank holding CDO squared . 2018-10-03 . Risk Quantum.
5. Web site: CDO Library : Financial Crisis Inquiry Commission.