As year-end reviews of the CDO market trickle out from the banks and rating agencies, one might best describe the mixed bag of viewpoints as "steady-as-she-goes." While the temptation to pop open a bottle of bubbly was there, market players likely cracked open six-packs instead. Surely there were no $60,000 wine-laden tabs run up in fancy restaurants on New Year's Eve not by CDO pros, at any rate.

According to Moody's Investor Service, the overall U.S. volume of deals it rated was up in 2002, reaching approximately $65 billion versus $57 billion in 2001 (including all but super senior pieces in synthetics). In all, Moody's rated 160 CDOs compared with 151 deals in 2001. The year saw a significant increase in cash-flow CLOs, very few high yield CBOs, and a continuing movement toward synthetic structures. Structured finance-backed and the "other" category made a sizeable chunk of the market, approximately 20% to 25%.

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