Creditflux Newsletter

Can former CDO bankers become useful members of society? They can if they take former Bear Stearns CDO head Lesley Goldwasser as their role model.

Observant television viewers of last month’s Oscars may have spotted Goldwasser, now a senior managing director at private equity firm Irving Place Capital. She was sitting with Prudence Mabhena, lead singer of Zimbabwe band Liyana and subject of the winning documentary short “Music by Prudence”.

Zimbabwe-born Goldwasser helped arrange a 2009 US tour for severely disabled Mabhena and her band, which helped catapult them to fame and made the film possible.

Rating agencies seem to have gone from chucking triple A ratings at any old CDO to refusing to upgrade them under any circumstances.

Investors in one corporate synthetic CDO suspect they might need to get back their full investment before Standard & Poor’s will raise its CCC- rating on the deal.

ANZ-arranged Echo Funding series 16 has lost around half its subordination since it was issued in March 2005. But with an original reference portfolio of 300 names, the CDO-squared would need to be hit by another half dozen defaults before investors lose any money.

Not that unlikely, you may think – except the maturity date for the deal is 6 April. So by the time you read this, Standard & Poor’s may already have upgraded the deal to AAA.

On the other hand, perhaps they will just quietly withdraw the rating when the bonds mature. 

“We have officially moved from a Greek tragedy to a Greek surreal comedy”

A credit trader reacts to the revelation that one of the biggest buyers of protection on the Greek sovereign was not a hedge fund “speculator” but the country’s partly state-owned Hellenic Post Bank