NEW YORK (Reuters) - Cantor Fitzgerald LP Chairman and Chief Executive Howard Lutnick said on Monday the big market for collateralized debt obligations (CDOs) has shut down, but he sees a huge repackaging business for the securities that have triggered billions of dollars in losses on Wall Street.
"The big CDO market is gone," Lutnick told the Reuters Finance Summit. "You'll see all the banks step out of it because they just can't do (the deals anymore) because they won't be able to churn them out to the buyers because the buyers are gone."
Lutnick, whose firm controls one of the world's largest bond brokerages, said the easy buyers of CDOs have left the market. That leaves what he described as sophisticated buyers, who are willing to do their own math and find their own value for distressed CDOs.
That will spawn a market for packaging the securities in a way that appeals to those investors, Lutnick said.
"The (CDO) repackaging business will be there, and it will grow enormously," Lutnick said.
Huge CDO-related write-downs already have led to the ouster of Merrill Lynch & Co Inc MER.N CEO Stan O'Neal and the resignation of Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) CEO Charles Prince.
Lutnick said people are afraid of CDOs because of the bad publicity surrounding them.
"No one is going to believe anybody anymore (about CDOs)," Lutnick said. "It's not just about the rating. You have to run your own math and come to your own view."
(Reporting by Tim McLaughlin)
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