Fitch Ratings last week introduced what it is calling a first-of-its-kind synthetic CDO risk modeling tool. The program - called RAP CD - is the result of a year's worth of work by a London-based team of analysts led by Group Managing Director Kimberly Slawek. It is said to be unique because it allows investors a better means at which to anticipate and manage portfolio volatility. So far, the product only works for CDOs that use corporate credit default swaps, although the ability to assess risk with asset-backed derivatives is on the way, according to the rating agency.
The release comes on the heels of several similarly aimed tools for detecting future behavior within the booming - and often opaque - synthetic CDO market. Fellow rating agency Standard & Poor's on June 26 released its CDO Evaluator Version 3.2, the newest version of its CDO modeling tool. Dominion Bond Rating Service last September released the beta version of its own synthetic CDO modeling program, called "CDO Toolbox."