May 2001
Battle lines drawn in European CDO market
The European market for collateralized debt
obligations is set to grow significantly this
year. This promises to be an area of intense
interest for US and UK structured finance
lawyers.
In March, three high-profile capital markets partners left
Weil, Gotshal&Manges' London office to join Ashurst Morris
Crisp. One of them, Erica Handling, has a strong reputation for
expertise in collateralized debt obligations (CDOs), acting for
Morgan Stanley, Merrill Lynch, Deutsche Bank and Nomura, among
other clients.
This development underlines the escalating competition between the
London offices of the big US securitization law firms and their UK
peers. Structured finance in Europe - and in Asia - may have some
way yet to go before it begins to rival the enormous US market, but
euro-denominated and/or European-based deals are on the increase
and the deal pipeline is, by all accounts, well stocked, especially
with CDO transactions.
CDOs, in their purest form, are vehicles that invest in high-yield
bonds and loans with low credit ratings, spreading the risk of
potentially low-performing individual investments across a
highly-diversified portfolio. This enables the CDOs to issue...
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