CDOs/CLOs

Few investment banks know the trust-preferred securities market as well as FTN Midwest Securities Corp. Since 2001, the First Horizon National Corp. unit has structured more than 30 pooled trust-preferred deals, raising $22 billion for hundreds of banks and thrifts.

For collateral managers who focus on CDOs, the most recent stream of troubling news in the financial sector has further shaken up an industry already reeling from more than a year's worth of nega-

Speakers on the opening panel at Information Management Network's second annual European CLOs, Structured Credit Products, and Credit Derivatives Summit said that the medium- to long-term outlook for the securitization market is positive, although it will be a bumpy ride along the way.

Fraudulent practices and false representations made by units at Countrywide Financial Corp. led MBIA Insurance Corp. to guarantee mortgage-backed securities that have already cost the insurer $459 million in policy claims and exposed it to several hundred millions more, MBIA said in a lawsuit filed earlier this week.

Prospects for CDO issuance is slim. As JPMorgan Securities analysts said in a recent report, "supply has yet to come into the market, with many prospective sellers waiting for market stability."

CDO shop Deerfield Capital Corp. announced the company's conversion to a C corporation to maximize its use of significant tax benefitsto increase stockholder value.

Last week U.S Secretary of the Treasury Henry Paulson extended the biggest lifeline to the financial markets of all time - and perhaps made the biggest gamble with U.S. taxpayer money - when he announced a plan to purchase approximately $700 billion in troubled assets from U.S. financial institutions.

As Congress battled over the terms of the Treasury bailout plan last week, Christopher Ricciardi, chief executive officer at Cohen & Co. and former managing director of global structured credit products at Merrill Lynch, launched an alternative proposal to the government's purchase strategy under the Troubled Asset Relief Plan (TARP) .

Par-based investors in the triple-A CLO market may soon have their sense of security tested. Many still apparently cling to the assumption that their bonds will ultimately be repaid at par, based on the senior position of these bonds in the transaction structure and the corresponding protection from potential losses.

Cohen & Co. CEO Christopher Ricciardi wrote an open letter to Treasury Secretary Henry Pauslon dated today titled Enhancing The Paulson Plan Through the Creation of a Federal Bond Insurance Corporation.