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Kirsten Bischoff, Opalesque New York: Opalesque recently covered a WSJ article on whether or not corporate synthetic CDOs would be the next problem facing investors. Specifically, the possible problem looming is "Most corporate synthetic CDOs are linked to the debt of US companies, some of which are looking a lot shakier amid an economic slowdown. To make matters worse, some credit-rating experts burned by the subprime mortgage crisis are taking a closer look at the way they rated synthetic CDOs. That could trigger downgrades in the $6 trillion market, forcing some investors to sell their securities or at least post significant losses."
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Additionally, this week, with the release of the Opalesque New York Roundtable publication we learned the outlook a few prominent fund managers have on the future of corporate default rates. Here comments on the possibility of looming corporate defaults ranged from "Our sense is that within the next 12-24 months, especially as you see year over year earning weakness and six times levered capital structures go to 8/9/10 times leveraged structures, some very good investment opportunities will develop." To "The default rates have been and still are very low, but we think they are going to go significantly higher; the rang...................... To view our full article Click here
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