Babson Capital Management is bringing its first synthetic investment-grade structure to market. Until now, the USD95 billion firm has managed only CDOs collateralized by leveraged loans or high-yield debt. This transaction synthetically references a USD2billion (or EUR2 billion, depending on the currency invested) pool of corporates which has an average rating of BBB plus. Babson will manage the portfolio throughout the life of the seven-year deal.
Called Avon Ridge, it has been arranged by SG Corporate & Investment Banking. Officials from Babson could not be reached by press time and reasons for the manager entering the synthetic arena were unclear. Structurers from SG were traveling and not available for comment. Investment in Avon Ridge is being offered through six classes of USD270 million and EUR50 million of floating-rate, credit-linked notes linked to be issued through an offshore special purpose vehicle.
The transaction is expected to close next month and the notes have been given preliminary ratings by Standard & Poor's ranging from AAA through to A minus. Its target investors, notional and pricing could not be determined.
