PIMCO Europe is gearing up to manage its first syndicated synthetic collateralized debt obligation referencing investment-grade corporates. Currently the European arm of the mega U.S. firm has only emerging market synthetic transactions on its books (DW 11/18/05). The underlying portfolio will be managed out of Munich and officials there did not return emails by press time. Reasons for entering the high-grade CDO arena could not be immediately determined.
The CDO offers investors single-tranche exposure to a portfolio of 127 corporate CDS with an average rating of BBB. The segregated tranches are rated AAA through to A minus, and packaged into seven- and 10-year notes denominated in U.S. dollars, euros or yen. The transaction was arranged by UBS. Structuring officials at the house declined comment.