Banc of America Securities is preparing the European debut of its synthetic collateralized loan obligation product, SERVES (Structured Enhanced Return Vehicle). SERVES is referenced to a portfolio of high-yield loans, which is then leveraged via a total-return swap, according to firm officials. The details of the European launch are still being ironed out, noted the officials, declining to elaborate. Officials familiar with BofA expect the European offering to be referenced to European high-yield names.
Michael Gerity, senior director in credit products at Fitch Ratings in New York, said the limited supply of rated high-yield loans in Europe has impeded the development of products such as SERVES in the continent. Recent growth in the number of rated high-yield names in Europe, however, may be improving liquidity and encouraging players such as BofA to stage their synthetic high-yield debuts across the pond, he added.
