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IPFS News Link • Stock Market

"This Is A CDO": Cerberus Selling $300MM In "Potentially Worthless"--

• by Tyler Durden

Back in May, when the Fed was struggling to rekindle animal spirits and force investors into every possible toxic debt instrument it could find, we explained how through the magic of modern monetary alchemy, a portfolio consisting of 96% Junk Loans had been converted into 87% investment grade bonds.

The magic catalyst in question: CLOs, which are structured credit products that take a portfolio of mostly junk loans - which are used to fund much of corporate America - and repackage them in such a way that the resulting product looks and feels much higher in credit quality, even though it consists of the exact same junky underlying securities, just presented in a different way.