$488 million bond pool collapses

The value of Adams Square I Ltd., a $488 million collateralized debt obligation, fell so sharply that the proceeds will be insufficient to pay back investors in the deal, according to published reports.
CDOs repackage assets into bond structures and are designed to diversify risk.
The CDO, managed by Credit Suisse Group of Zurich, Switzerland, was a combination of subprime asset-backed securities and derivatives known as swaps.
Adams Square’s CDOs tumbled so sharply that the most highly rated classes were unable to return more than 25 cents on the dollar to its investors, according to a report in The New York Post.
S&P estimated that about $165 million worth of Adams Square notes would not be repaid as a result of the rapid downgrade, which triggered defaults, the report stated.