PUBLISHER: KBV Research | PRODUCT CODE: 1565227
PUBLISHER: KBV Research | PRODUCT CODE: 1565227
The Global Collateralized Debt Obligation Market size is expected to reach $63.2 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.
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.
Recent Strategies Deployed in the Market
List of Key Companies Profiled
Global Collateralized Debt Obligation Market Report Segmentation
By Type
By Application
By Geography