There wasn't any good news that emerged from the European CDO sector in 2007. But for banks and investors who braved the market and looked for some value in this beleaguered sector, European synthetic CDO tranches offered some respite.
Specifically, the single-tranche synthetic CDO of ABS allowed market participants using structured finance collateral to benefit from the advantages of synthetic technology. Among these advantages is better transparency because of the structure's customizable risk profile and relative simplicity. The ability to place single tranches also results in more cost-efficient trading as well as superior liquidity for cash CDOs.