Paris-based AXA Investment Managers will shortly bring to market two collateralized debt obligations, each with a 20% discretionary trading bucket, says a market participant. The deals will also have more banks than usual in the syndicate, this person says. Laurent Gueunier, head of investment-grade CDOs at AXA, declined to comment. Axa had been talking about launching such as structure since early this summer (BW, 7/21).
The discretionary bucket in the upcoming deals allows AXA to make portfolio changes without having to justify the trades to the ratings agencies. Usually, trades are only permitted if there is credit deterioration or improvement and have to be rubber stamped by the ratings agencies.
The synthetic deals, both called Overture, will total E3 billion, 15% of which will be cash notes. One deal will be dollar-denominated the other will be euro-denominated. It has not yet been determined what the dollar/euro split will be.
CDOs generally have only one bank on a deal. The Overture deals will have eight banks on the syndicate to give it global distribution. J.P. Morgan Securities is the deals' lead arranger. ABN AMRO will distribute in the Benelux region, Bayerische Landesbank in Germany, CDC Ixis Capital Markets in France and Spain, DBS in Asia ex-Japan, Mizuho Securities in Japan and Wachovia Securities in the U.S.