CONTENTS

PRINT THIS STORY:

CHANGE TEXT SIZE:

Is CDO the new CMBS?

The collateralized debt obligation (CDO) has become a popular finance tool, with more than $22.4 billion in such obligations issued through the first nine months of 2006. Though CDOs are unlikely to replace CMBS or more-standard portfolio loans, they are likely to represent an increasingly important niche product, observers say.

CDO refers to a wide spectrum of structures that pool assets and then sell variously rated bonds that derive their income from the pool, or, less commonly, from trading assets in the pool. Borrowers can establish exit strategies earlier with CDO pools than with commercial-mortgage-backed-securities pools, making this a good way to obtain relatively short-term financing for a project, observers say. For investors, CDOs offer a path to higher-risk but also higher-return deals that might not otherwise be available. The extra risk is mitigated to some degree by the active involvement of the CDO’s collateral manager.

Tenant consolidation to surge in Asia

Jones Lang LaSalle’s Retailer Sentiment Survey Asia says 44 percent of the Asian chains it surveyed have plans for mergers or acquisitions in the next 12 months, which suggests that the method is the most popular among retailers seeking to grow. In Southeast Asia the number comes in at 64 percent, China at 41 percent and India at 30 percent.“They have the skill sets to make such strategic moves woirk and the understanding that as the market and competitive landscape increases, organic growth alone will not be the way to deliver on profit expectations,” the report says.