The same quest for arbitrage that spawned last year's wave of collateralized bond obligations is causing a wave of other, alternative and non-traditional CBO structures - including the innovative use of guarantees and credit risk default transfer structures.

As a tag-on to an actively managed fund (typically a hedge fund), the PPO, or principal protection option, which was originally brought to market last June in Ferrall Capital Management's Concert Series I, is gaining investor interest, while similar transactions are said to be on the slate.

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