The market-value CDO, a structure that had virtually disappeared from sight in the European financial marketplace over recent years, has reappeared. Sources say that these vehicles, which now come equipped with a range of new attributes they did not have in the past, are greatly in demand from an eager investor base, and going forward, issuance is expected to pick up.

Market value CDOs - which differ from their par-based, cashflow counterparts in that their value is linked to the market value of a diversified pool of underlying assets - went out of style in the late 1990s after severe price volatility in the credit markets put undue pressure on many structures. Hard-pressed to find the necessary equity to keep structures afloat, managers of market value CDOs had no choice but to liquidate holdings, and so until 2004, these kinds of vehicles were not popular at all.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.