Thanks in part to a low default rate, 2005 was a strong year ratings-wise for collateralized bond obligations and collateralized loan obligations, according to a recent report by Standard & Poor's.

Only two CLO tranches were downgraded and 22 were upgraded. CBO managers saw 50 upgrades compared with only 15 downgrades, representing a significant improvement over 2004's 26 CBO upgrades and 23 downgrades. The mild credit environment that characterized 2005 is, in part, why it was a strong ratings year for the vehicles.

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