As investment houses ramp up their efforts in the collateralized debt obligation (CDO) sector, a move towards inclusion of alternative asset types in collateralized bond obligation (CBO) and collateralized loan obligation (CLO) issuance is paving the way for a strong CDO showing for the year 2000, market participants say.

Not only do multi-sector CDOs present excellent arbitrage opportunities due to higher yielding coupons, but this type of security is usually not subject to the market volatility inherent in emerging markets or high yield paper.

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