Solent Capital Partners, a U.K. hedge fund and CDO manager with USD4 billion under management, is managing a collateralized debt obligation with exposure to a pool of cash and synthetic credits. The USD600 million structure, arranged with Bank of America, references 70% U.S. asset-backed securities and cash CDOS, as well as 30% synthetic credit-linked notes. It has slices of debt rated AAA through to equity.
Jonathan Laredo, partner in London, said the CDO was sold last month to institutional investors, the majority of which are U.S-based. He added the hybrid structure was new territory for some Solent clients. He added the returns generated by combining cash and synthetic assets, as well as the firm's role as active synthetic manager, improved the appeal to investors. The CDO returns three-month LIBOR plus 55 basis points on AAA assets, 75 bps on AA, 170 bps on A and 325 bps on BBB. The structure is named Gennaker, after the specialty sail used on racing boats and in line with a series of Solent deals with sailing names. Liz Wood, spokeswoman for Bank of America in London, declined comment.
