Subject category:
Finance, Accounting and Control
Published by:
IBS Case Development Center
Length: 6 pages
Data source: Published sources
Topics:
Development financial institution; Special purpose vehicle; Debentures and loans; Collateralised Debt Obligation; CDO; Asset management company; Asian CDO market; First CDO; Multiple tranched; Indian corporate CDO fund; Industrial Credit and Investment Corporation of India Ltd; ICICI; Mutual fund; Statutory liquid and cash reserve ratios; Reverse merger
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Abstract
India''s maiden Collateralised Debt Obligation (CDO) structured by Industrial Credit and Investment Corporation of India Ltd (ICICI) under the ICICI Securities Fund was on similar lines to a close-ended mutual fund. The primary motive behind this introduction of the CDO was to fulfil the adequate reserve requirements as prescribed by the Reserve Bank of India before the reverse merger of ICICI Bank and ICICI. But the initiative taken by ICICI met with disastrous results. Investors felt that the risk involved was much more than the returns they would earn. The complexity involved in the investment procedure was also another factor adding fuel to the failure.
About
Abstract
India''s maiden Collateralised Debt Obligation (CDO) structured by Industrial Credit and Investment Corporation of India Ltd (ICICI) under the ICICI Securities Fund was on similar lines to a close-ended mutual fund. The primary motive behind this introduction of the CDO was to fulfil the adequate reserve requirements as prescribed by the Reserve Bank of India before the reverse merger of ICICI Bank and ICICI. But the initiative taken by ICICI met with disastrous results. Investors felt that the risk involved was much more than the returns they would earn. The complexity involved in the investment procedure was also another factor adding fuel to the failure.