CDO Watch: Adams Square I

Standard & Poor's announcement on a CDO called Adams Square I is drawing lots of attention. According to the Financial Times, Adams Square I was apparently liquidated at 25 percent of par. Ouch. The ripple effects are interesting to say the least. The more senior, including the super-senior, tranches that the Adams Square I was "protecting" got hit hard too. Also, the credit default swaps that the issue included (it was a hybrid) were apparently terminated. This was pushed forward by the senior investors, who have the right to do so in the event of a default. We're likely going to see more of this.    

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