After a more than two-year hiatus, the commercial real estate (CRE) collateralized debt obligation (CDO) is poised to return with a deal expected to surface as early as this year, according to securitization industry insiders.

But unlike the toxic CRE CDOs that dominated the market at its frothy height in 2006 and 2007, a new transaction will likely be back to basics; conservatively underwritten and structured, and backed by a static, or unchanging, pool of assets.

Rating agencies have already begun fielding pitches for new deals and expect as an added measure of safety that the first CDO will be backed by whole, or unsecuritized loans, and not commercial mortgage-backed securities, or CMBS.

These CDOs would offer more structural flexibility than CMBS for loan aggregators, and far more yield for investors, according to securitization specialists familiar with pitches taking place. A CRE CDO has not been completed in the country since 2008. (Reuters)