Their status as independent third parties makes trustees a logical choice to act as collateral administrators on CDOs. Traditionally, the servicer – who is sometimes the originator – has acted as collateral manager in structured finance deals. But the growth of the synthetic CDO market has involved trustees running concentration tests and portfolio profiles, supplying data for rating agency models and monitoring subordination levels.
Moody’s has criticized trustees’ failure to oversee servicers in some US asset-backed securitization deals.
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