But the Sunday Tribune can reveal that more than 80% of the CDOs being put on a credit watch by S&P are listed on the Irish Stock Exchange (ISE), which may expose European pension funds to America's subprime meltdown.

S&P confirmed last week that it may cut the ratings of bonds issued as part of 118 debt transactions, 95 of which have their European listing in Ireland.

The ISE has for several years marketed itself as a friendly place for CDOs to list. A European listing is necessary for pension funds to invest.

As the underlying mortgages increasingly go into default and the overall CDO market teeters, investors may lose up to $250bn ( 181bn).

The rising defaults have already led some to flee the industry altogether.

On Friday, GE said it would exit the US subprime market, though it continues to lend in Europe. Some 50 lenders in the US have closed over the issue.

A spokeswoman for the Financial Regulator, which jointly authorised the listing of the bonds with the ISE, declined to comment. When asked about the pension implications of the listing of the bonds, she said that it was not a matter for the regulator and that "you would have to talk to the Pension Board in relation to that".

Pension funds and hedge funds have been attracted to the transactions because they offer higher, but riskier, returns than conventional bonds.

In many cases even pension funds that don't own bonds issued as part of CDOs are still exposed to the market through their investment in hedge funds.

Evelyn Ryder, the chair of the Society of Actuaries' finance and investment committee, said that there were two ways pension funds that had invested in the debt deals could lose out.

"Downgrading them would reduce the value of the bonds the pension fund has invested in them, reducing the value of the fund as a whole, and the income paid by them will be impacted by the defaults, " she said.

Ryder added, however, that due to the relatively conservative investment strategy of Irish pension funds, their exposure to CDOs was minimal and generally less than 1% of their total value.

But the possible downgrading of the bonds will have a much larger effect on other European markets, such as Britain and the Netherlands.

Stuart Ritchie, the president of Britain's Faculty of Actuaries, said that many of that country's largest pension funds were exposed to the CDO market.

Meanwhile, the National Pension Reserve Fund has halted its plans to invest in CDOs. A spokesman for the fund, which was due to start investing in them later this year, said that it now had no immediate plans to do so.

The ISE was unable to provide a spokesperson for this article.