Product Description

The most cutting–edge read on CDO and credit market structures
Collateralized Debt Obligations and Structured Finance provides a state–of–the–art look at the exploding CDO and structured credit products market. Financial expert Janet Tavakoli examines securitization topics never before seen in print, including the huge increase in the CDO arbitrage created by synthetics; the tranches most at risk from this new technology; dumping securitizations on bank balance sheets; the abuse of offshore vehicles by companies such as Enron; and securitizations made possible by new securitization techniques and the introduction of the Euro. This valuable guide comprehensively covers one of the fastest growing markets on Wall Street, predicting where new bank regulations and other developments may lead to product growth or product extinction. While providing an overview of the market and its dynamic growth, Collateralized Debt Obligations and Structured Finance explores the types of products offered, hedging techniques, and valuation and risk/return issues associated with investment in CDOs and synthetic CDOs.
Janet M. Tavakoli, MBA (Chicago, IL), has over eighteen years of experience trading, structuring, and marketing derivatives and structured products with major financial institutions in New York and London. She is also the author of Credit Derivatives and Synthetic Structures, now in its Second Edition (0–471–41266–X).

Product Details

• Amazon Sales Rank: #462109 in Books
• Published on: 2003-09-19
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 352 pages

Review
“…Tavakoli uses her broad professional experience to examine the CDO market in simple and clear language.” (Risk, March 2004)

"Tavakoli…does what she can to address this market’s growing pains in…this intriguing book" (Hedge World)

Review
“…Tavakoli uses her broad professional experience to examine the CDO market in simple and clear language.” (Risk, March 2004)

"Tavakoli…does what she can to address this market’s growing pains in…this intriguing book" (Hedge World)

From the Inside Flap
What is a collateralized debt obligation (CDO)? What is securitization? What is a synthetic credit structure? What is an asset–backed security? Ask any market professional and they will all agree that these are structured products, but total agreement usually ends there–mainly because, in a global financial environment, one product may have more than one definition.

To help you keep up with the expanding CDO market and the various elements of structured finance, Collateralized Debt Obligations and Structured Finance digs deep to explain some of the newest areas in structured finance, particularly the CDO market and some of the problems created by its rapid growth.

Collateralized Debt Obligations and Structured Finance provides a state–of–the–art look at the exploding CDO and structured credit products market. Financial expert Janet Tavakoli–author of the widely popular Credit Derivatives and Synthetic Structures–examines a variety of securitization topics never before seen in print, including the huge increase in the CDO arbitrage created by synthetics; the tranches most at risk from this new technology; dumping securitizations on bank balance sheets; the abuse of offshore vehicles by companies such as Enron; and securitizations made possible by new securitization techniques and the introduction of the Euro.

This valuable guide comprehensively covers one of the fastest growing markets on Wall Street, predicting where new bank regulations and other developments may lead to product growth or product extinction. While providing an overview of the market and its dynamic growth, Collateralized Debt Obligations and Structured Finance also explores the types of products offered, hedging techniques, and valuation and risk/return issues associated with investing in CDOs and synthetic CDOs.

Written in a clear and accessible style, this book is a valuable resource that will provide you with critical insights into many areas of this important market sector.

Customer Reviews

Structured Finance - Both Risks and Rewards
As a finance professional with almost ten years of experience, I was both educated and entertained. I especially enjoyed Tavakoli’s explanations of abuse in a variety of structured finance deals both past and present. She maintains that Sarbanes-Oxley is no deterrent as long as corporations instead of individuals feel the brunt of the consequences, but she also offers solutions.
I finally understand Enron’s abuse of offshore vehicles, the involvement of investment banks, and insurance companies (sureties). Tavakoli even explains motives and why finance professionals went along with it: profits, politics, and pluralistic ignorance. She makes the case that the players were well aware of what they were doing. She uses game theory to describe the moves the players made against each other when they tried to recover losses - or avoid making payments against claims - after Enron went bankrupt.
Tavakoli explains why banks have left themselves open to dangerously high concentrated credit exposures, fraud, and structured finance gaming. She explains how false social evidence, lack of due diligence, and lack of sufficient reserves further contributed to the problem.
The rating agencies also get their due. She recommends viewing ratings on structured finance products with skepticism, especially where documentation risk and cash flow diversion are involved. I was astonished to learn that products are being sold as AAA rated product, when it really is more like a AA rated product, or even worse.
The explanation of synthetic securitizations using credit derivatives is the best I?ve ever read. Tavakoli thoroughly discusses the language risks, cash flow risks, and rating risks. She compares a cash CDO with a 5-year maturity synthetic CDO. This is the first time I fully understood how these deals work. I was surprised to learn that there is no standard definition of a super senior tranche, and no one ? not rating agencies, regulators, or bank managers has challenged this.
In summary, this book is even better than Credit Derivatives? by the same author, and that book was a very good book. This book belongs on the bookshelves of investors, structurers, regulators, and managers.