Just as the Euro market seemed ready for a slowdown, CDO flow is nearly matching London's heat wave, with temperatures in the city soaring above Barbados' high.

The majority of new CDOs are backed by ABS and leveraged loans, primarily driven by investor appetite for stable underlying assets to counterbalance new interest in the corporate unsecured markets, said analysts at Dresdner Kleinwort Wasserstein. Expect the steady flow of that collateral to continue through the second half of the year, the analysts said.

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