Scottsdale, Ariz. - Collateralized debt obligations are hotter than a Phoenix summer.

At least that seemed to be the overarching consensus emanating from the majority of attendees at the Arizona conference last week, as several hundred of them flocked to attend panels on investing and issuing CBOs and CLOs.

"Every manager in the world is getting into this stuff," said David Cass, vice president of Cigna Investment Management. "But can you actually tell me how to buy a bond that will tighten and not widen?"

While individuals differed as to the merit of investing in these structures, nobody could deny how important ABS-driven CBOs have become recently.

"CDOs present a great opportunity in 2000," said panelist James Hunt, president of Sunamerica Corporate Finance.

This information-rich sector has become popular, panelists said, because of a general trend towards managed funds.

"It is very well accepted and will become a bigger segment of ABS," added Joe Lorusso, president of Structured Finance Advisors. "You can choose your risk, and that is a big plus. This trend will definitely continue.

"And since rating agencies focus on diversity, they like this type of structure," added Charles Richardson, chief financial officer of Green Point Financial.

At a panel discussing trends in the structuring and accounting precepts that go into issuing CBOs, speakers discuseed the use of special-purpose entities and how the Financial Accounting Standards Board views these securities.

According to Deborah Rappoport-Bigman, a director at PricewaterhouseCoopers LLP, evaluation of an SPE should include whether or not one or more entities provide significant funding, overall decision-making powers, access to assets, management oversight, ability to change articles of incorporation and the risk and rewards of ownership.

Other new structures and evaluation factors that were discussed at length were "CBOs of CBOs," the use of synthetics in CBO transactions and whether or not collateral managers are able to manage assets carefully

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