Market demand for collateralized debt obligations remains well off year-ago standards, but March did see a relatively large uptick in new issuances for the complex securities that have helped fuel much of the credit mess surrounding riskier mortgages. According to a report from Morgan Stanley, $13.4 billion of CDOs were issued in March, up from $3.3 billion in January and February -- the first quarter total of $16.7 billion, however, was well off the $165 billion pace recorded one year earlier. Via Reuters, who also got a hold of the Morgan Stanley data:
All of the CDO issuance in March came from collateralized loan obligations, either middle market or leveraged loan CLOs, Morgan Stanley said. U.S. dollar-denominated transactions accounted for 61 percent of issuance, with euro-denominated transactions making up the rest ... In the first quarter, an unprecedented 4,561 rating actions were taken on CDOs, of which 4,485 were downgrades, Morgan Stanley said.
In other words, CDO issuers aren't packaging any mortgage debt into new issues -- the only thing moving at all is leveraged bank loans. In 2007, by way of contrast, a full 47 percent of CDOs issued were backed by structured products.