Thursday, July 26, 2007
Synthetic CDO buyer universe
--at senior level attachment points, US and European insurance companies as well as banks are sellers of protection throguh STCDOs
--down the capital structure, hedge funds are primarily sellers of protection at the equity (first loss) level.
--thses strategies oftenreduce spread risk by buying protection at the mezzanine level, hedgin with credi default index products or single-name CDS
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