Collateralized Debt Obligation Market By Type (Collateralized loan obligations (CLOs) , Collateralized bond obligations (CBOs) , Collateralized synthetic obligations (CSOs) , Structured finance CDOs (SFCDOs)) , By Application (Asset Management Company, Fund Company, Others) : Global Opportunity Analysis and Industry Forecast, 2024-2033
Collateralized Debt Obligation Market
The collateralized debt obligation market was valued at $27.5 billion in 2023 and is projected to reach $80.4 billion by 2033, growing at a CAGR of 11.6% from 2024 to 2033.
A collateralized debt obligation (CDO) is an accumulation of various forms of debt, including loans, mortgages, and bonds. Lenders sell this collection to investors in small tranches with different risks and returns. CDO is a form of derivative security as its price remains dependent on the price of other assets. The major benefits offered by CDOs to banks include reduction of risks in balance sheet and conversion of illiquid security into a relatively liquid one. A competitive advantage for CDOs is that they exhibit the potential to offer higher yields as compared to traditional bonds.
The ability of CDOs to offer high returns at a low interest rate augments the growth of the collateralized debt obligation market. In addition, the customization of profiles in the form of different tranches with varying risk levels offers investors the opportunity to invest as per their risk-bearing capability, which acts as a significant driver for the market. To prevent fraud and fuel transparency in the CDO process, the integration of technology is a major trend emerging in the market. The assimilation of blockchain & AI algorithms to make payments immutable & automated and predict faults in the process is transforming the landscape of the collateralized debt obligation market.
However, high dependency of CDOs on the quality of underlying assets restrains the growth of the market at times when the assets experience default rates. Moreover, compliance with the stringent regulatory environment pertaining to capital adequacy, transparency, and risk retention is a challenging task. The development of the collateralized debt obligation market is hampered significantly in case of insufficient compliance. On the contrary, rise in the popularity of “green CDOs” that are associated with environmental, social, and governance (ESG) strategies is projected to present remunerative opportunities for the collateralized debt obligation market. As per the data of the Global Sustainable Investment Alliance—a global collaboration of membership-based sustainable investment organizations—ESG investing has globally surpassed $30 trillion, which is an approximate increase of 68% over the past few years.
Segment ReviewThe collateralized debt obligation market is segmented into type, application, and region. On the basis of type, the market is divided into collateralized loan obligations (CLOs), collateralized bond obligations (CBOs), collateralized synthetic obligations (CSOs), and structured finance CDOs (SFCDOs). Depending on application, it is classified into asset management company, fund company, and others. Region wise, it is analyzed across North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa.
Key FindingsOn the basis of type, the structured finance CDOs (SFCDOs) segment held a high share of the market in 2023.
Depending on application, the asset management company segment acquired a high stake in the market in 2023.
Region wise, Asia-Pacific was the highest revenue generator in 2023.
Competition AnalysisThe major players in the global collateralized debt obligation market include Citigroup Inc., RBC Dominion Securities Inc., Deutsche Bank AG, UBS AG, Goldman Sachs Ayco, Jefferies Financial Group Inc., Natixis, Wells Fargo and Co, The GreensLedge Group LLC, and Morgan Stanley. These major players have adopted various key development strategies such as business expansion, new product launches, and partnerships to strengthen their foothold in the competitive market.
Key Market SegmentsBy TypeCollateralized loan obligations (CLOs)
Collateralized bond obligations (CBOs)
Collateralized synthetic obligations (CSOs)
Structured finance CDOs (SFCDOs)
By ApplicationAsset Management Company
Fund Company
Others
By RegionNorth America
U.S.
Canada
Europe
France
Germany
Italy
Spain
UK
Rest of Europe
Asia-Pacific
China
Japan
India
South Korea
Australia
Rest of Asia-Pacific
Latin America
Brazil
Argentina
Rest of Latin America
Middle East and Africa
GCC Countries
South Africa
Rest of Middle East and Africa
Key Market PlayersCitigroup Inc.
RBC Dominion Securities Inc.
Deutsche Bank AG
UBS AG
Goldman Sachs Ayco
Jefferies Financial Group Inc.
Natixis
Wells Fargo and Co
The GreensLedge Group LLC
Morgan Stanley