Credit vehicle defaults continue to climb

[flashl]

...

In the past year, many highly rated CDO tranches have been downgraded sharply and this has triggered what is called an "event of default" for many structures. When a CDO experiences an EOD, many investors holding various slices of the deal are sidelined and control of the entity passes to the most senior investors.

These so-called super-senior holders seize control of the CDO and seek to claim their money back ahead of others, including those that held the AAA-rated slice of risk.

The super-senior holder can either accelerate payments to themselves from the assets or liquidate the portfolio - a chain of events that some other holders are now contesting in court.

"Of the 151 collateralised debt obligations to experience event of default, at least 16 have now liquidated and trustees on another 15 deals have given liquidation notices," Total Securitization says. "Another 58 CDOs have accelerated payments to senior note holders."

Financial Times

[TheCowsCameHome]

1. I wonder what all that means in english

[Sinistrous]

2. Attempt at translation:

The bigger the vulture, the bigger the share of the road kill.