Fitch Creates New CDO Rating Group

Fitch Ratings has created a new group for rating U.S. commercial real estate collateralized debt obligations due to increased volumes of issuance.

CDOs are pools of debt instruments repackaged into tranches carrying different levels of risk.

They are designed to spread risk by giving investors exposure to a range of underlying assets and have become popular in recent years.

Jill Zelter, managing director, CDOs, Fitch Ratings, said U.S. commercial real estate CDO issuance volumes and deal size had more than doubled in the first quarter of this year.

Total U.S. CDO issuance so far this year is $51.4billion, compared to $48.4 billion in the same period last year, according to Dealogic, the investment banking research provider.

The U.S. commercial real estate CDO group will be led by managing director Jenny Story.

Other members of the new team will include senior director Karen Trebach, who will oversee surveillance and asset manager ratings, and directors Jimmy Lee and David Harrison, who will focus on new issuance.

Fitch also plans to transfer seven experienced analysts to focus on analyzing these transactions, and will be making more hires.