Innovation has been a constant hallmark of the CDO market over the past five years. In the pursuit of new arbitrage opportunities, market participants have sought to apply "CDO technology" to a wider array of assets than the original core of corporate bonds and loans. In 2000, the first CDO exclusively secured by a portfolio of bank trust preferred securities appeared. These securities present some real advantages from a securitization perspective, including high yields and predictable payment patterns, but they also present some significant challenges from a ratings perspective.

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