CDS of CDOs

CDS of CDOs or CDS on CDOs are credit default swaps that reference CDOs.
They function in the same manner as other CDS, but a typical CDS of CDO provides for a potential stream of payments over the life of a security. More specifically, a typical CDS of CDO provides for the protection seller to cover cashflow shortfalls during the entire life of the reference obligation without requiring termination of the contract. This is often called a pay as you go or pay-as-you-go or PAUG structure.


Significant Risk Transfer

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