Difference between revisions of "Static CDO"

From Open Risk Manual
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== Definition ==
 
== Definition ==
'''Static CDO'''. A CDO where collateral is fixed through the life of the CDO. The reference assets are bought and then are kept untouched for the term of the product.
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'''Static CDO'''. A CDO where [[Collateral]] is fixed through the life of the CDO. The reference assets are bought and then are kept untouched for the term of the product.
  
Investors can assess the various tranches of the CDO with full knowledge of what the collateral will be. The primary risk they face is credit risk. A deal that starts off managed can become static if the performance is too poor. Also, some deals are static but allow managers to sell out poorly performing assets subject to certain conditions, but do not allow purchase of new assets, so are semi-static.
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Investors can assess the various tranches of the CDO with full knowledge of what the collateral will be. The primary risk they face is [[Credit Risk]]. A deal that starts off managed can become static if the performance is too poor. Also, some deals are static but allow managers to sell out [[Non-Performing Loan | poorly performing assets]] subject to certain conditions, but do not allow purchase of new assets, so are ''semi-static''.
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== See Also ==
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* [[Managed CDO]]
  
 
== Disclaimer ==
 
== Disclaimer ==

Latest revision as of 10:04, 25 March 2020

Definition

Static CDO. A CDO where Collateral is fixed through the life of the CDO. The reference assets are bought and then are kept untouched for the term of the product.

Investors can assess the various tranches of the CDO with full knowledge of what the collateral will be. The primary risk they face is Credit Risk. A deal that starts off managed can become static if the performance is too poor. Also, some deals are static but allow managers to sell out poorly performing assets subject to certain conditions, but do not allow purchase of new assets, so are semi-static.

See Also

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.

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