Securities and Exchange Commission, affirmed 40, upgraded three, and revised Rating Outlooks on two tranches from six collateralized debt obligations
(CDOs) backed primarily by Trust Preferred (TruPS) securities issued by banks and insurance firms.
Surplus Notes and Insurance Trust-Preferred CDOs: Surplus notes and trust-preferred CDOs (collateralized debt obligations
) provide another funding source for small and midsize insurance companies that find it costly to issue capital on their own.
"Derivatives are different from, but often contused with, collateralized debt obligations
, or CDOs, the bundled bad mortgages sold as securities by mortgage lenders and others," explained NCPA Senor Fellow David Grantham.
Summary: Moody's Investors Service has updated its approach to rating Collateralized Debt Obligations
Three days after Zions Bancorp took a USD387m charge to rid itself of a portfolio of trust-preferred collateralized debt obligations
in the wake of the adoption of the Volcker Rule, regulators said other banks need not necessarily do the same.
Maiden Lane III originally contained $62 billion face value of collateralized debt obligations
backed by mortgage-backed securities of various grades.
The total value of the various forms of risky debt that were issued--corporate debt, asset-backed securities, collateralized debt obligations
, and municipal debt in particular--grew substantially over the previous year, while yield spreads for these instruments decreased.
Banks favoured S&P rated more than $2.8 trillion worth of residential mortgage-backed securities and almost $1.2 trillion worth of collateralized debt obligations
from September 2004 to October 2007, according to the complaint.
The ratings firm, a unit of publishing group McGraw Hill Companies, said the Civil Division of the (http://www.justice.gov/) US Department of Justice will file a civil complaint against it focusing on ratings the agency assigned to collateralized debt obligations
collateralized debt obligations
, optimal patent design, and predicting volatile consumer markets.
According to the lawsuit, the bank failed to write down collateralized debt obligations
, many of which were tied to subprime mortgages, and instead hid the risky assets in separate entities within the organization.