What phase of a CDO involves the portfolio manager assembling the initial collateral portfolio?

The phase of a Collateralized Debt Obligation (CDO) where the portfolio manager assembles the initial collateral portfolio is known as the ramp-up phase. During this phase, the manager selects and purchases the underlying assets, which typically consist of various types of debt instruments, to create a diversified portfolio that will back the CDO issuance. This phase is critical because the quality and composition of the collateral directly influence the CDO's structure, credit risk, and overall attractiveness to investors.

In the ramp-up phase, the focus is on building the portfolio to meet the required investment criteria and ensure that it aligns with the objectives of the CDO. This involves careful analysis and selection of assets to optimize returns while managing risk.

Other stages mentioned, such as the amortization phase, involve the repayment of principal and interest on the CDO tranches, while the exit phase relates to the winding down of the CDO once the underlying assets have matured or been sold. The revolving phase usually pertains to structures where the collateral can be actively managed and replaced over time, but it is not primarily focused on assembling the initial portfolio.