CDO-Squared is a collateralized debt obligations backed primarily by the tranches issued by other CDOs. These instruments became popular before the financial crisis of 2007–08. There were 36 CDO-Squared deals made in 2005, 48 in 2006 and 41 in 2007. Merrill Lynch was a big producer, creating and selling 11 of them.
The collapse of the market for collateralized debt obligations and CDO-Squared contributed to the 2008 subprime mortgage crisis. Goldman Sachs appears to be the last bank to hold CDOs-Squared, holding $50 million in June 2018.
- ^“CDOs-Squared Demystified” (PDF). Nomura Fixed Income Research. 2005. Retrieved 2018-10-04.
- ^The Financial Crisis Inquiry Report, 2011, p.203
- ^“Collateralized Debt Obligation Squared – CDO-Squared”. Investopedia. Retrieved 2018-10-04.
- ^Woodall, Louie (2018-10-03). “Goldman Sachs is last major bank holding CDO squared”. Risk Quantum.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.