CDC IXIS Capital Markets plans to launch a novel collateralized debt obligation referenced to asset-backed securities, which will need fewer assets in order to ramp up the deal. The CDO borrows delta hedging techniques from the derivatives market and was seen as a smart move by conference delegates because many CDOs of ABS are in danger of being shelved since demand for ABS from CDO managers is out-stripping supply (DW, 3/22).
Richard Jacquet, head of marketing for the investment grade CDO group in Paris, said, "One of the advantages of this deal is that we don't have to find a super senior investor, we just issue AAA to equity notes." The notes are linked to CDC AAA rated medium-term notes.
The deal, dubbed MUST 50/5, is referenced to 50 asset-backed securities and 5 CDOs, according to Jacquet. The ABS is AAA rated and includes credit cards and residential mortgage-backed securities.
