Collateralised debt obligations (CDOs) may not sound like the most glamorous instruments, but investment bankers are getting quite excited about them at the moment. Fuelling interest is the rapid growth in Europe's high-yield bond market. The greater the number of bonds out there in the martket, say structurers, the wider the opportunities to package them up into CDOs.

Bankers have so far been able to put together relatively few European high-yield CDOs, but as activity is slowing in the maturing American high-yield arena, Europe could take the ball and run with it.