CDOs: To Q or not to Q?

By Nathan Abegg, senior manager at Deloitte & Touche LLP

CDOs come in a variety of shapes and sizes, ranging from static pool vehicles with little changes in collateral composition to very actively managed vehicles. When creating these structures, using GAAP accounting analysis is required in order to determine consolidation consequences, if any, for the participating parties (including transferors, investors and the asset manager). For accounting purposes, such vehicles are either a QSPE, VIE or VoIE. This article explores the differences in these entities and evaluates some advantages and disadvantages of each, in relation to the market motivations of investors and asset managers.