Baring Asset Management will manage its first synthetic collateralized debt obligation fully dedicated to emerging markets. The deal will be arranged by ING Bank in London. It is a follow up to ING's inaugural EM CDO Mondriaan launched in the fall (DW, 11/23), which was static.
Baring has been added as manager at the request of investors, said Elena Fediaeva, senior emerging-market correlation trader at ING in London. The CDO is linked to a portfolio of predominately emerging-market corporates.
"Economic fundamentals in many countries have substantially improved, whereas rating agencies are still catching up," Fediaeva noted. She also said emerging-market corporates, many of which are exporting companies, have strong market positions and cash flow generation, as well as less risk of leveraged buyout or shareholder-friendly actions that hurt credit investors.
Five tranches, comprising two equity slices, BB, A and AAA ratings, are currently being road showed to institutional investors globally and there is the option of capital protection on certain slices.
