State Street global Advisors, which manages roughly USD35.5 billion in fixed-income assets, is considering entering the collateralized debt obligation market. "We're certainly looking at [CDOs], because of the fee potential," said Joe Marvin, head of U.S. bonds in Boston. Any deal is on ice for the time being, he added, because SSgA is waiting for the Financial Accounting Standards Board's clarification of consolidation criteria. By consolidation, he is referring to FASB's proposal to raise the minimum equity level held by third-party investors in CDOs to 10% from 3% (BW, 3/4).
The firm will probably start with a U.S. CDO, before it goes into the European market, added Mark Talbot, head of international fixed-income in London. Both Talbot and Marvin declined to speculate on when a deal could hit the market.
Talbot said CDOs are an interesting way of increasing assets under management in asset classes, in which the firm is seeking to become more involved. He declined to say which asset classes the firm is considering.
