A feature of the credit derivatives market over the past couple of years has been the development of spread- and market value-based structures in the rating space, and constant proportion debt obligation (CPDO) structures are the latest to arrive in this area. This structure is a variation of the credit constant proportion principal insurance (CPPI) structure that promised so much last year but hasn't had as much take-up in the rated market as originally predicted. CPDO transactions address some of the specific limitations of rating the CPPI structure, while retaining the overall investment strategy. Indeed, the CPDO's leverage mechanism is really just the inverse of the CPPI one. A key difference, though, is the CPDO structure's added ability to recover
