Collateralized debt obligations, or CDOs, came to infamy 10 years ago as a hallmark of the global financial crisis. Now, Citi wants to once again become the dominant player in this $70 billion market.
that Jia Chen, a 35-year-old director at the bank, has spent two years between New York and London hawking synthetic CDOs to potential investors — and promoting returns as high as 20%.
Chen’s no newcomer to CDOs, either. While still relatively young by industry standards, the "
Ten years after the recession, low volatility in financial markets coupled with near-zero interest rates have left investors looking for higher returns, at the expense of much higher risk. CDOs, which bet on the performance of mortgage-based products, among other things, can provide this.
A Citi spokesperson reiterated that the products were fundamentally different — and thus safer — this time around because "
The bank returned to the CDO market in 2013, but demand didn't pick up until 2015. Today, the products make up about $100 million in revenue annually, or just 0.5% of Citi's total income.