Dresdner Kleinwort Wasserstein is structuring a USD1 billion synthetic collateralized debt obligation, according to Saad Zein, head of the firm's structured product group in New York. The deal, which is expected to hit the market by early next month, will be referenced to Dresdner's loan portfolio and will include mid and large-cap corporate exposures, said a market official.
The static CDO is being structured to allow Dresdner to remove credit risk from its loan portfolio. "This is a structure that is starting to be used by a lot of banks that are looking to increase their mid-market lending and at the same time want to unload market exposure from their balance sheet," the official added.
Zein said it was an internal tool for the bank to lay off part of its credit risk, but declined further comment. The market official said the deal would have three or four tranches rated from AAA to BBB, but added that the exact modeling of the deal has yet to be finalized.
