For collateral managers who focus on CDOs, the most recent stream of troubling news in the financial sector has further shaken up an industry already reeling from more than a year's worth of nega-

tive developments, including a scarcity of liquidity, downgrades, declining issuance volume and an overall decrease in investor confidence in structured products. As may be expected during a downturn in any particular market segment, the ensuing chaos has swallowed up the weakest players and provided an opportunity for stronger players to expand their market share by picking up shakier competitors at bargain prices. Although mergers and acquisitions in the collateral management space have been limited to date, the consolidation wave that has swept up the banking industry in recent weeks will likely hit the collateral management world before long, leaving struggling collateral managers forced to either close up shop or seek haven with stronger institutions.

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