The Genesis of a CDO

Portfolio’s flash-based

explanation of what a CDO is has proved extremely popular,

I’m happy to say. Now the WSJ has got in on the act as well, with a

much more detailed (and much less metaphorical) flash-based explanation

of how

one particular CDO got downgraded. Personally, however, I

find the graphic in the accompanying

article easier to understand: it really shows how one tiny

$50 million unrated tranche could help raise $1.125 billion of

BBB-rated debt all the way into AAA territory.

(Via Ritholtz)

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