Moody's Investors Service announced that it has modified its approach for rating synthetic collateralized debt obligations, moving to Monte Carlo simulation-based models from binomial approaches. In many circles, particularly Europe, the change is a significant one. Dubbed "correlation-intensive structures," the list of securities affected includes static synthetic CDOs-of-CDOs, CDOs of equity default swaps and CDOs with long and short swaps. Since about 2002, issuance of these securities has boomed, leading all of the ratings agencies to look more closely at how the risks are evaluated. For Moody's, the move to Monte Carlo was a natural one, said Bill May, a managing director at Moody's. "When a market grows as rapidly as the static synthetic market has, you look at that and think about the best ways to assess credit risk. It naturally focuses your attention," said May. "Tomorrow, if CFOs [collateralized fund obligations] went through the roof we would look more closely there as well."