The message from overseas is clear: murky waters still cloud Europe's CDO market, which has a strong taste for synthetics.

Seemingly ageless corporate names, such as Enron Corp. and Worldcom Inc., continue to dominate already battered synthetic CDO portfolios, contributing to the number of rating actions seen so far this year, said Standard & Poor's in its recent study aptly titled Corporate Defaults Drive European Synthetic CDO Rating Actions. British Energy PLC and Railtrack PLC were two other high-profile entities continuing to pop up. In fact, these four corporate entities were referenced in 12 to 17 transactions of the 39 synthetic CDO downgrades issued by March 2003.

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