With the majority of investors believing the CDO market has passed the peak of defaults for 2002, bets are circulating as to which transactions will pass muster and close by year-end. The result has been a mix of reviews and forecasts from analysts as to which collateral type will pan out as the better stocking stuffer.

The CDO market has witnessed more than 50 so-called "fallen angels" this year. However, the recent Federal Reserve rate cut is expected to let the air out of the default balloon. Recent investor memory is one driver of current volatility, particularly at the mezzanine level, sources say. For those cashing in on the volatililty, the mezzanine level presents an impressive opportunity.

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