Royal Bank of Scotland plans to structure public synthetic collateralized debt obligations referenced to asset-backed securities for the first time later this year. The firm has already structured private deals, but in order to increase its distribution it is looking to the public arena, according to David Littlewood, global head of structured credit products in London.
The firm started with the private market because it had a select group of clients that were looking for this type of paper, noted Littlewood. "Why go through the expense of a public deal, if you can retain the costs and plough that back," he added.
These deals would likely be referenced to a mixed pool of ABS, such as residential-mortgage-backed securities, commercial-mortgage-backed securities and European structured finance deals. "It's not worth doing less than USD1 billion," said Littlewood, explaining that a deal needs to be of that size in order to be economical.
