The Global Collateralized Debt Obligation Market size is expected to reach USD63.2 billion by 2031, rising at a market growth of 11.2% CAGR during the forecast period.
The implications for the market are multifaceted. First, the substantial asset base in these key Member States provides fertile ground for the development and diversification of CDO products. Financial corporations can leverage their vast asset pools to create innovative structured products that attract a wide range of investors seeking yield and risk mitigation. Thus, the Europe region acquired 27% revenue share in the market 2023.
This increased liquidity benefits both issuers and investors, facilitating smoother market operations and attracting more participants to the market. Enhanced funding efficiency through securitization also means corporations can raise capital cost-effectively, further driving debt issuance. Rising corporate debt levels and securitization activities are propelling the market's growth.
Additionally, Global investors seek to participate in emerging markets, driving demand for financial products, including CDOs backed by diverse global assets. The growth of cross-border investments and financial flows exemplifies the expansion and integration of global financial markets. Hence, global economic growth and expansion of financial markets are driving the market's growth.
However, the underlying assets in a CDO, such as corporate bonds, mortgage-backed securities, and other loans, carry inherent credit risk. If the issuers of these debt instruments default, it directly impacts the cash flows available to service the CDO tranches. Thus, the risk of credit rating downgrades and defaults hinders the market's growth.
The implications for the market are multifaceted. First, the substantial asset base in these key Member States provides fertile ground for the development and diversification of CDO products. Financial corporations can leverage their vast asset pools to create innovative structured products that attract a wide range of investors seeking yield and risk mitigation. Thus, the Europe region acquired 27% revenue share in the market 2023.
This increased liquidity benefits both issuers and investors, facilitating smoother market operations and attracting more participants to the market. Enhanced funding efficiency through securitization also means corporations can raise capital cost-effectively, further driving debt issuance. Rising corporate debt levels and securitization activities are propelling the market's growth.
Additionally, Global investors seek to participate in emerging markets, driving demand for financial products, including CDOs backed by diverse global assets. The growth of cross-border investments and financial flows exemplifies the expansion and integration of global financial markets. Hence, global economic growth and expansion of financial markets are driving the market's growth.
However, the underlying assets in a CDO, such as corporate bonds, mortgage-backed securities, and other loans, carry inherent credit risk. If the issuers of these debt instruments default, it directly impacts the cash flows available to service the CDO tranches. Thus, the risk of credit rating downgrades and defaults hinders the market's growth.
Driving and Restraining Factors
Drivers
- Increasing institutional demand for yield-generating investments
- Rising corporate debt levels and securitization activities
- Global economic growth and expansion of financial markets
Restraints
- High complexity and lack of transparency
- Risk of credit rating downgrades and default
Opportunities
- Evolution of investment strategies and portfolio management
- Growing investor awareness and education
Challenges
- Limited secondary market liquidity
- Negative perception and legacy of the financial crisis
Type Outlook
Based on type, the market is divided into collateralized loan obligations (CLOs), collateralized bond obligations (CBOs), collateralized synthetic obligations (CSOs), and structured finance CDOs (SFCDOs). In 2023, the collateralized loan obligations (CLOs segment garnered 71% revenue share in the market. This dominance can be attributed to CLOs' capacity to expose investors to a diversified portfolio of loans, often resulting in attractive risk-adjusted returns.
Application Outlook
On the basis of application, the market is segmented into asset management companies, fund companies, and others. In 2023, the fund companies segment attained 24% revenue share in the market. Fund companies increasingly incorporate CDOs into their investment strategies to enhance diversification and yield potential.Regional Outlook
Region-wise, the market is analyzed across North America, Europe, Asia Pacific, and LAMEA. In 2023, the Asia Pacific region generated 18% revenue share in the market. This growth can be linked to increasing economic development, rising investment activity, and a growing appetite for structured financial products among investors.- Jul-2023: UBS announced a strategic partnership with Numarics, a digital accounting solutions provider, to digitize and expand financial and administrative solutions for SMEs in Switzerland. This partnership aims to combine and simplify accounting, administrative tasks, and banking services for SMEs with a focus on a mobile-first user approach.
- Apr-2023: RBC partnered with Conquest Planning, a technology platform that aims to transform financial planning by offering customized and convenient advice. Under this partnership, RBC would bring next-generation financial planning ability to its financial planners and clients.
- Mar-2023: JPMorgan Chase & Co. signed a definitive agreement to acquire Aumni, Inc., a provider of analytics software to the venture capital industry. Through this acquisition, J.P. Morgan will deliver an industry-leading suite of innovative solutions to the private markets. Additionally, Aumni will complement the Capital Connect platform by J.P. Morgan.
- Oct-2022: Wells Fargo & Company teamed up with Google Cloud, a Cloud platform offered by Google, to release its Fargo virtual assitant powered by Google Cloud’s artificial intelligence (AI) capabilities. Fargo would leverage natural language processing technology to offer actionable financial wellness tips and understand customers' intents, providing tailored responses. The virtual assistant would be built on Google Cloud's Dialogflow platform, showcasing Wells Fargo's commitment to leveraging advanced technology to enhance customer service and engagement.
- Aug-2022: JPMorgan Chase & Co. took over Global Shares Ireland Limited, a provider of cloud-based software for managing share plans. With this acquisition, JPMorgan Chase aims to become a top provider in the industry, offering cutting-edge solutions for employee ownership to both private and public companies. Furthermore, companies and employees stand to gain from Global Shares' expertise in share plan services, complemented by J.P. Morgan's extensive range of wealth management, executive financial services, and banking products.
- Aug-2022: Royal Bank of Canada joined hands with ICICI Bank Canada, a wholly owned subsidiary of ICICI Bank. This collaboration aims to bring combined banking solutions to newcomers migrating to Canada. Furthermore, newcomers would benefit from the assurance of the ICICI Bank brand, combined with RBC's network, portfolio, and scale across Canada.
List of Key Companies Profiled
- Citigroup Inc.
- UBS AG (UBS Group AG)
- The Bank of America Corporation
- Wells Fargo & Company
- Deutsche Bank AG
- JPMorgan Chase & Co.
- Morgan Stanley & Co. LLC
- Royal Bank of Canada
- Barclays PLC
- Goldman Sachs & Co. LLC
Market Report Segmentation
By Type
- Collateralized Loan Obligations (CLOs)
- Collateralized Bond Obligations (CBOs)
- Collateralized Synthetic Obligations (CSOs)
- Structured Finance CDOs (SFCDOs)
By Application
- Asset Management Companies
- Fund Companies
- Other Applications
By Geography
- North America
- US
- Canada
- Mexico
- Rest of North America
- Europe
- Germany
- UK
- France
- Russia
- Spain
- Italy
- Rest of Europe
- Asia Pacific
- China
- Japan
- India
- South Korea
- Taiwan
- Malaysia
- Rest of Asia Pacific
- LAMEA
- Brazil
- Argentina
- UAE
- Saudi Arabia
- South Africa
- Nigeria
- Rest of LAMEA
Table of Contents
Chapter 1. Market Scope & Methodology
Chapter 2. Market at a Glance
Chapter 3. Market Overview
Chapter 5. Global Collateralized Debt Obligation Market by Type
Chapter 6. Global Collateralized Debt Obligation Market by Application
Chapter 7. Global Collateralized Debt Obligation Market by Region
Chapter 8. Company Profiles
Companies Mentioned
Some of the key companies in the Collateralized Debt Obligation Market include:- Citigroup Inc.
- UBS AG (UBS Group AG)
- The Bank of America Corporation
- Wells Fargo & Company
- Deutsche Bank AG
- JPMorgan Chase & Co.
- Morgan Stanley & Co. LLC
- Royal Bank of Canada
- Barclays PLC
- Goldman Sachs & Co. LLC
Methodology
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