UBS Warburg has started pitching its fourth USD1 billion synthetic collateralized debt obligation dubbed SALS, according to a market official. The firm's last SALS deal hit the market at the end of last year. The static CDO is referenced to a USD1 billion pool of 100 investment-grade bonds diversified among industries, including autos, chemicals, utilities and telecom companies. The deal, which has a five-year maturity, is scheduled to be rated in New York within the next two weeks and will come to market in the next couple of months.
Investors will be able to buy into the CDO through four tranches, rated from AAA to BBB. The AAA rated notes are likely to yield three-month LIBOR plus 55 basis points and the BBB-rated notes will probably pay three-month LIBOR plus 350-400bps, the official said. The credit-default swap portion of the deal is around USD900 million, he added. Sal Naro, global head of credit derivatives in Stamford Conn., declined to comment on the deal.
