Despite an initial valuation of only eight cents in the dollar on nearly $1 million worth of collatoralised debt obligation (CDO) investments, Cabonne Council is now set to recoup more than half of the lost money.

Following the recent stock market crash, the market value of CDOs fell dramatically.

A large number of councils across NSW invested large sums in CDOs, including Cabonne Council and Orange City Council.

However, when the CDOs were unwound, it was found the actual value of the investments was above the market valuation.

For Cabonne Council, it means more than half of $921,000 worth of written-off funding will be recovered.

Council will now write-on $241,405 with a similar amount expected to be added thanks to the interest accrued on the investments.

The investments, made up of purchased debts, only revealed their true value when the exact sources of the debts were discovered.

“The best way to describe them is as packages of debt that can be from all around the world,” Cabonne general manager Graeme Fleming said.

“When it was unwound they found it was 100 per cent guaranteed.”

The bankruptcy of Lehman Bros in the US triggered an automatic default on one of the CDOs meaning 100 per cent of that investment would be returned.