The Study of CDO(Collateralized Debt Obligation ) market prospect in Taiwan
Date Issued
2006
Date
2006
Author(s)
Tsai, Sen Bu
DOI
zh-TW
Abstract
A CDO, or collateralized debt obligation, is a form of structured financing and typically generates a fixed cash flow. It has been around for 18 years and $1.1 trillion of CDOs are now outstanding. Yet, it was only 0.4 % of ABS in 1995 and increased greatly to 15% in 2005. It has been the fastest-growing investment vehicle of the last decade. The development of ABS in Taiwan has also played an important role while the government was dealing with Bond-Fund in 2005. In the meanwhile, the CDO has started the new era in the financial market of Taiwan.
The research of this paper intended to find out what the business opportunity would be for CDOs during the Bond-Fund Crisis. In order to evaluate if CDOs would work in the financial market of Taiwan, we analyzed the structures and risks of CDOs issuing in the international financial market. Besides, we discussed if the issuer or investor in Taiwan is qualified to deal with a CDO. Furthermore, we discovered some of the problems that need government to help the development of CDOs in Taiwan.
We could simulate or learn from the financial firms which already have successfully issued CDOs. For example, we can invite the top global investment banks for help and support. Based on their experience, they might be able to develop a well system for issuing a CDO in Taiwan. They could also train our employees to become professional sales selling the CDO products. In addition, we could diversify the underlying assets of CDO. We do not have to limit our CDO only to the local companies. Instead, we need to globalize the underlying assets of our CDO. It would then make CDOs more flexible and efficient in the financial market. Although people nowadays think it is difficult to develop a CDO in Taiwan, the government is still very active in helping issue a CDO. Therefore if there is an appropriate policy which would cooperate well with the financial market, Taiwan’s CDOs would have its own market all over the world someday!
Subjects
債權資產證券化
CDO
Collateralized Debt Obligation
Type
other
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