Laguna ABS CDO is the second UBS-underwritten collateralized debt obligation in a week forced to convert its commercial paper into another AAA tranche, according to Moody’s Investors Service. The rating agency has withdrawn its ratings on the deal as a result of the change. Issuers are forced into such rare conversions only when investors willing to purchase the commercial at the pre-specified spread are not available (TS, 11/14).
After converting its $632 million of commercial paper, the $1.3 billion Laguna ABS CDO now has $1.1 billion of AAA term notes. The deal closed in October 2004 and is managed by PIMCO.
The Belle Haven ABS CDO managed by NIBC Credit Management and underwritten by UBS was also forced into the unusual change, converting $516 million of commercial paper. That deal closed just two months after Laguna.
UBS and PIMCO officials did not return calls for comment.