The continued collapse of the US sub-prime mortgage market is likely to prompt a serious knock-on effect in the broader market, according to reports.
The "massive" rate of defaults in certain parts of the collateralised debt obligation (CDO) market, The Telegraph newspaper in the UK cited a leading fund manager as saying.
The CDO sector, a key part of the investment cycle, is made up of different types of debt that are divided up according to their level of risk and return.
Francois Bartholemy, a senior fund manager at F&C Partners, told the newspaper he thinks "there will be a massive rate of default of CDOs which have invested in subprime mortgages".
"We think the CDO market has been used as a depository for weak credit, in fact the weakest credit," he added.
Bartholemy noted the risk may take some time to trickle through and create defaults, the Telegraph said.
The "massive" rate of defaults in certain parts of the collateralised debt obligation (CDO) market, The Telegraph newspaper in the UK cited a leading fund manager as saying.
The CDO sector, a key part of the investment cycle, is made up of different types of debt that are divided up according to their level of risk and return.
Francois Bartholemy, a senior fund manager at F&C Partners, told the newspaper he thinks "there will be a massive rate of default of CDOs which have invested in subprime mortgages".
"We think the CDO market has been used as a depository for weak credit, in fact the weakest credit," he added.
Bartholemy noted the risk may take some time to trickle through and create defaults, the Telegraph said.