Friday, January 3, 2014

TruPS CDOs - Still Underrated?

Hello readers, and welcome to 2014!

In our first post of the year, we're going to continue with a theme we've been commenting on for years: we're noticing that many TruPS CDOs languish at deflated ratings levels, not having been adequately attended to by the rating agencies since their 2009 downgrades.  

Consider for example this first pay, amortizing bond (CUSIP 903329AB6) from one deal (US Capital Funding I) -- which has strengthened dramatically since its original Aaa/AAA ratings were provided back in 2004. It now has much more than 100% principal cushion! Yet, oddly enough, the ratings remain much lower to this date.  S&P still has this in deep junk territory, at B+, albeit on "watch" for upgrade.

Let us know if you would like to join the call for appropriate upgrades in 2014!


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