While leveraged loans have proven more stable and less risky CDO collateral than high yield bonds, some might be questioning their presence in structured vehicles, as ultimate recovery rates on bank loans are declining.

Actually, bank loan ultimate recovery rates have been falling since 1996, and for the extremely stressful period from 1998 to 2002, stood at 74.1%, according to David Keisman, managing director, (risk solutions) at Standard & Poor's. Keisman spoke at Bear Stearns' 12th Annual Global Credit Conference last week.

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