TruPS CDOs are securitizations of trust preferred securities (TruPS) typically issued by domestic banks, bank holding companies, S&Ls, insurance companies, and REITs. Generally speaking, TruPS securities are unsecured subordinated debt that can defer interest similar to preferred stock.
Some TruPS-issuing banks have already failed with the expectation that additional banks may face similar challenges. In our experience, the challenge with accurately evaluating TruPS CDOs is analyzing the performance of the underlying banks and insurance companies.