What is bespoke banking

Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. A bespoke CDO is a structured financial product—specifically, a collateralized debt obligation CDO —that a dealer creates for a specific group of investors and tailors to their needs.

The investor group typically buys a single tranche of the bespoke CDO, and the remaining tranches are then held by the dealer, who will usually attempt to hedge against potential losses using other financial products like credit derivatives. Traditionally, a collateralized debt obligation CDO pools together a collection of cash flow-generating assets—such as mortgages, bonds, and other types of loans—and then repackages this portfolio into discrete sections called tranches. Bespoke CDOs can be structured like these traditional CDOs, pooling classes of debt with income streams, but the term is usually referring to synthetic CDOs that invest in credit default swaps CDS and which are more highly customizable and nuanced.

Tranches are portions of a pooled asset divided by specific characteristics. Different tranches of the CDO carry different degrees of risk, depending on the underlying asset's creditworthiness.

Therefore, each tranche has a different quarterly rate of returns that corresponds with its own risk profile. Obviously, the greater the chance of default of the tranche's holdings, the higher the return it offers. The major rating agencies do not grade bespoke CDOs—the creditworthiness evaluation is done by the issuer and to some extent, market perception.

Bespoke CDOs—like CDOs in general—have lost popularity due to their prominent role in the financial crisis that followed the housing bubble and mortgage meltdown between and The creation of these products by Wall Street was seen as contributing to the massive market crash and eventual government bailout—as well as a lack of common sense.

The products were highly structured investments that were hard to understand—both by those buying and those selling them—and difficult to value. Despite this, CDOs are a useful tool for transferring risk to parties willing to shoulder it, and for freeing up capital for other uses.

Things remain difficult for all sectors and as things start to slowly return to whatever normality now looks like, we understand that there will be different pressures on businesses large and small. If we can help at all then please do not hesitate to give any of us a call or drop us an email and we would be delighted to help and support. Please pass this on to any of your suppliers, contacts and indeed tenants if we can help in any way. We want to thank everyone who has supported Bespoke Banking over the last 11 years and look forward to being able to continue to work with you throughout this crisis and beyond.

In the meantime, we would urge everyone to follow the advice being given by our Government and to try and ensure the spread of the virus is contained as much as possible.

Action now will enable us to beat this and for people and businesses all over the UK to be able to bounce back as soon as we can.

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