Ironing out language-related wrinkles in credit default swap deal documentation along with last month's launch of a new U.S. ABS index means an obscure area of the CDO market may be ready for substantial growth.

Volume is growing rapidly in a specific type of CDO that synthetically references asset-backed securities. Some believe it could surpass the issuance volume of cash-backed CDO deals in 2006. The cash-backed structure is by far the market's most popular security.

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