If you ask investors for their least favourite abbreviations from the crunch, CDO, CLO, RMBS and CMBS may spring up.
This is because the structured credits, based on mortgages and property, in this ‘alphabet soup’ were the instruments whose failure stood in many investors’ minds for the financial crisis. What Lehman Brothers did for the reputation of investment banking, instruments linked to loans on sub-prime property did for financial markets. Many securities backed by residential and commercial mortgages (RMBS and CMBS respectively) carried high credit ratings, as did many bundles of loans, called collateralised debt and loan obligations (CDOs, CLOs). Numerous investors in them just looked at...
To continue reading this article...
Join Investment Week for free
- Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
- Get ahead of regulatory and technological changes affecting fund management
- Important and breaking news stories selected by the editors delivered straight to your inbox each day
- Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
- Be the first to hear about our extensive events schedule and awards programmes