Price dislocation in the CDO market has not only halted new issuance but has made the value of existing CDO securities almost impossible to assess. In an effort to address these valuation issues, Moody's Investors Service's Wall Street Analytics (WSA) recently launched Credit Values DCV (Discounted Cash Value), a product the rating agency hopes will enhance the transparency of CDOs by providing investors with valuation information about their securities.

Pricing troubles first came to light after the summer RMBS downgrades sent the value of many ABS CDO securities tumbling and left investors unable to value their portfolios. "What drove the launch of the product was a response to the market," said Gus Harris, managing director and president of Moody's WSA, who noted that many of Moody's WSA customers, primarily investors in CDOs, were calling up during the summer crisis asking for help finding the true underlying value of their investments. "It was [the investors'] view at the time and it continues to be [their] view today that some of the market prices that are currently available appear to be unreasonable and reflect a very harsh haircut for the current volatility and lack of liquidity in the market."

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