CDO contagion

``Standard & Poor’s have just downgraded 153 CDO tranches - all of them European and all of them synthetic; which means they’re based on credit default swaps... The interesting part, though, is that while 39 of the tranches downgraded reference US RMBS, 113 are linked to corporates. Downgrades on corporate CDOs have been rare before now. Moody’s reported in March than just 10 tranches of synthetic corporate CDOs were downgraded in 2007, compared to 1,572 structured finance - MBS and ABS - CDOs.''