Bit by bit, more light is beginning to shine through what is arguably the most opaque corner of the CDO market - equity tranches. Helping matters are some initiatives from market players including Moody's Investors Service's recent announcement that it would begin tracking CDO equity return data. Furthermore, Wachovia Securities - whose analysts were concerned that Moody's data reflected bleaker-than-realistic returns - took that information a step further in order to ascertain more precise figures.

These are welcome developments as it is typically quite difficult to gather both performance and pricing data on the lowest portion of the CDO capital structure. This is because the pieces are generally unrated and relatively illiquid compared with triple-A CDO notes.

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