Warning For Structurers – US Regulator Criticizes Collateralized Fund Obligations (CFOs)

The National Association of Insurance Commissioners (NAIC) has concluded ratings can understate CFO risks. This finding is likely to, at least temporarily, reduce CFO demand.

Insurers are a primary buyer of CFOs. The NAIC’s findings are the conclusion of a year-long investigation.

The NAIC will now review risk on individual CFOs. Firms including Blackstone and KKR have issued CFOs.