CDO Liquidation Fuels Rally July 23, 2010

--Joy Wiltermuth

A surge in collateralized loan obligation paper trading followed last week’s liquidation of the $489 million Stanton CDO I, a CDO-squared containing nearly all CLO securities. “A lot of paper [from the CLO vehicle] got lifted off of dealers’ balance sheets,” said one trader. The auction has market participants speculating about spreads tightening enough to open the window for more primary CLO issuance.
The liquidation attracted 15 to ...

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