Getting a Handle on CDOs is a Complex Challenge
Los Angeles Times Published: March 18, 2007
by Tom Petruno, Times Staff Writer

"No one can say we're not aware of the risks," said Kevin Kendra, an analyst at rating firm Derivative Fitch. "It just hasn't materialized yet" in the structure of CDOs, he said.

Yet many analysts say the market prices of the diciest mortgage bonds, those backed by so-called sub-prime loans, indicate that still-rosy CDO ratings aren't reflecting reality.

Some mortgage bonds rated BBB, the lowest investment-grade rating, "are going to see real losses of principal soon," predicted Janet Tavakoli, head of Tavakoli Structured Finance Inc., a consulting firm.

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