Lehman Increases Eaton Vance CDO

  • 28 Sep 2003
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Lehman Brothers has increased the size of Eaton Vance's, Eaton Vance CDO VI collateralized loan obligation, from approximately $300-350 million to $510 million after the deal was well received by CDO investors. Lehman priced the notes backing the leveraged loan-backed transaction two weeks ago, with the triple-A portion featuring what one analyst described as an innovative structure.

The triple-A portion of the deal is split into three tranches--a $345 million A-1 piece, a $30 million A-2 note and a $10 million A-3 note. The interest is paid pro rata to all three, but the principal payments will be split to the A1 and then to the A2/A3, said a structurer. Importantly, the A-2 receives principal payment before the A-3, which leads to a shorter maturity and the A-3 being subordinate to the A-2, he said. As a result, pricing on the A-2 is LIBOR plus 40 basis points, while pricing on the A-3 is LIBOR plus 80 basis points. "This demand was driven by an investor," said a source familiar with the deal.

Officials at Eaton Vance declined comment as the deal has not yet closed. John Mawe of Lehman Brothers did not return calls. This will be Eaton Vance's sixth CDO.


How It's Priced
RatingTranche SizeWALPricing
Aaa/AAA (A-1)$345 million8.1LIB+55
Aaa/AAA (A-2)$30 million7.4LIB+40
Aaa/AAA (A-3)$10 million10.1LIB+80
A2/A$27 million10.3LIB+155
A2/A$13 million10.3110 (swap)
Baa2/BBB$15 million10.3LIB+325
Baa2/BBB$10 million10.3325 (swap)
Ba2/BB$10 million10.3LIB+750
Equity$50 million
  • 28 Sep 2003

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