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  • February 14, 2023
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Static Synthetic CDO

A synthetic collateralized debt obligation (synthetic CDO) that has a fixed (static) reference portfolio until maturity. Once a sponsor constructs a portfolio of names (such as 50 or 100 investment grade obligations), the components (of the static pool or obligor portfolio) do not change over time. In a static pool, delivered obligations must be liquidated within a pre-defined time schedule.

In a static portfolio, the constituents (components) of the obligor portfolio remain fixed and well identified over time, as opposed to a dynamic portfolio where the total value of a reference portfolio remains fixed, but its actual components may change over time as new obligors could be added to the pool, reflecting those that have been repaid or prepaid, or those that have been removed due to inability to meet specific conditions.


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