BOCA RATON, FLA. - In addition to searching for CDO collateral, asset managers are searching for word on the next trouble spot in the CDO market, panelists speaking at Information Management Network's ABS East said last week. While overall the market appears much more stable than just two years ago, sources agreed, in the wake of the now frenzied search for cheap collateral and rising interest rates, a lack of transparency across many metrics isn't exactly stopping investors from having market discipline.
As a result, ABS CDOs were brought under the microscope at last week's gathering, given their multifaceted abilities to source several collateral types. But, thanks to spread compression, more demand this year has smacked heads with a lack of arbitragable CDO collateral. The search for CDO collateral has impacted nearly all parts of the asset-backed market. Even the subprime mortgage market is feeling the heat of the search.