JPMorgan has structured a 15-year synthetic collateralized debt obligation in which synthetic exposure to a pool of corporates is substituted after seven years with the deal's collateral. The private transaction is believed to have been arranged for a single investor as a follow-up to a deal last year. Structurers from the firm referred calls to Sarah Oppler, spokeswoman, who declined comment.
Initially, coupons will be linked to a portfolio of predominately North American and European corporates. In year eight this will change to the underlying collateral, which at inception is USD250,000 of General Electric Capital Corp. bonds.
"There is obviously appetite out there for long-dated assets," said one credit official familiar with the deal. Another speculated this transaction is aiming to make CDOs appeal to liability-driven investors, such as pension funds, which need long-dated assets to meet long-dated liabilities.
