Moody’s said it expects growth in the CDO market to continue to be driven by synthetic rather than cash transactions. Synthetic deals accounted for approximately 96% of the European CDO market in 2002, according to the rating agency. “Other CDO trends likely to persist include the securitisation of esoteric assets and the growth in multi-jurisdictional deals. The latter has already had the effect of contributing to a sharp drop in CDO deals in the UK in 2002,” added Moody’s.
“In terms of asset class, the strongest growth is likely to be witnessed in CDOs [collateralised debt obligations], commercial mortgage-backed securities and whole-business securitisation, with moderate growth in asset-backed securities and residential mortgage-backed securities,” said Stephen Roughton-Smith, managing director of Moody's structured finance group.