Collateralized debt obligations, which contributed to $323 billion of bank writedowns, 65,000 job losses and the collapse of Bear Stearns, may be making a comeback, reports Bloomberg News.
Springfield, Mass.-based Babson Capital Management took over a $680 million CDO from Hartford Financial Services Group Inc. this month. Deutsche Asset Management replaced London-based Brevan Howard Asset Management on a CDO in April. Blackstone Group, the largest buyout fund operator, sold three CDOs totaling $1.3 billion in April.
The combination of takeovers and new funds could be a sign of a new stage of the global credit crisis as CDO managers vie for more than $2 billion in annual fees generated by the market.
"We absolutely believe the market will come back," Matthew Natcharian, managing director for structured products at Babson, a unit of MassMutual Financial Group, told Bloomberg.
"We're actively looking for opportunities."
Sales of CDOs have slumped to $23.3 billion this year from $207 billion in the same period of 2007, according to Morgan Stanley data.
