As expected, CDO managers feasted on the recent bout of asset-backed credit default swap spread widening - producing a two-fold effect of reeling spreads back in and pushing the burgeoning CDO pipeline out.

Mezzanine structured finance CDOs sourcing synthetic assets have made up the bulk of new-issue activity since ABCDS spreads widened, according to JPMorgan Securities. Triple-B minus ABCDS rose roughly 50 basis points from late August to mid-September, at the same time the total notional amount of mezzanine structured finance CDOs in the pipeline grew from about $7 billion to $22 billion, according to JPMorgan.

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