Global Financial Crisis


PHOTO: AP Remember the junk debt that sparked the Global Financial Crisis? Demand for low-quality loans is rising again.

If the grounds for another financial crisis are brewing, it doesn’t take a lot of investigation to determine where they might lie.

The epicentre of the last financial crisis was the implosion of junk bonds – the bundles of securitised sub-prime mortgages labelled as collateralised debt obligations, or CDOs.

If there were to be another crisis, it wouldn’t be at all surprising if it started with a meltdown of junk bonds again – this time bundles of securitised sub-prime loans labelled as collateralised loan obligations, or CLOs.