Synthetic structured finance CDO volume could reach $38 billion in total issuance in the second half of this year - a 483% increase over the $7 billion of issuance seen in this year's first half, according to Merrill Lynch. The investment bank is anticipating synthetic SF CDO issuance could outpace cash SF CDO issuance in the second half of the year - with a forecast of 32 cash deals in the 5Q05 and 4Q05, versus 38 synthetic.

"We expect the $11 billion of synthetic SF CBO issuance-to-date to be merely a rounding error for what is to come," Merrill analysts wrote in research released last week.

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