At the tomorrows CDO conference, Moody’s Investors Service will announce it is embarking on another transparency effort. According to sources, the ratings agency will make cash flow CDO pricing information available to all qualified institutional buyers (QIBs) through its new Enhanced Monitoring Service. Previously only parties associated with a specific CDO deal were given this level of monitoring ability.
Described as a new stand alone product offered within a suite of new CDO-related products rolled out by the rating agency this year, the Enhanced Monitoring Service (EMS) provides market pricing information for over 300 cash flow CDOs on a security-by-security basis. So, for example, if a cash flow CDO contained 100 names, recent pricing information is offered for most names within that CDO’s collateral pool. Thus an entire CDO can be monitored and updated fairly quickly.
The news is fairly significant for the purpose of driving liquidity. Rather than just a few parties being privy to the EMS information on a CDO, all QIBs can potentially attain faster access to more up-to-date information about the security. The mantra of the recent CDO landscape has been transparency, transparency! Earlier efforts have seen Wall Street dealers move to provide CDO modeling information on third party analytic systems, and the Bond Market Association’s recent announcement that it was providing deal documents online to QIBs.
