Call them super-sophisticated or call them super-reckless, buyers of structured credit equity tranches are a relatively rare breed. This is not, however, the only problem: they are also all alike. This riskiest part of the capital structure still lies largely in the hands of fast-money hedge funds and it isn’t hard to figure out what that means: any market shock is likely to turn them all into sellers overnight. These aren’t the kind of buyers that will ride out sustained mark-to-market volatility since they cannot take a lot of pain...
