(Pensions & Investments) Hedge funds and other investors are reviving a type of securitized product that blew up during the financial crisis. This time around they’re convinced that the structures will not only weather the next downturn, but might even profit from it.
Money managers are resurrecting collateralized debt obligations that bundle risky bonds and loans into new, higher-rated securities. Issuers such as Anchorage Capital Group and Fortress Investment Group are betting tweaks to the products will allow them to keep enough cash on the sidelines that, when the next slowdown hits, they’ll be able to swoop in and buy the most beaten-down debt on the cheap.
