The lack of universal support underscores how despite the growing market and promises that liquidity is best for the marker, some dealers are still taking steps to keep the details of their transactions away from their rivals.
Wachovia is the most prominent dissenter, with 21 deals done and a zero percent participation rate. However, the bank is being driven by legal rather than competition issues. There are potential liabilities associated with putting documents on deals sold as Rule 144a securities on a third-party Web site so it is choosing not to post its deals there, said Arturo Cifuentes, managing director and head of CDO research. He stressed the bank freely shares information on its deals with investors via its own information hub. "It's not that we are trying to hide anything--we just don't feel the legal issues have been sorted out," he said of TBMA's portal. Another banker added: "Wachovia's point is very valid--once you hand it over to them, who knows who gets it." CDO officials from Deutsche Bank and UBS either declined comment or did not return calls.
Chris Ricciardi, head of TBMA's CDO committee and of the structured credit product group at Merrill Lynch, encouraged investors at last week's second-annual CDO conference to shun transactions from dealers who don't put their documents in the library. "In order for this to work, we need everyone to participate. If you are an investor, your job is to not buy [bonds from dealers not participating]," he said at the conference. Merrill has posted all of its deals, he said.
All that being said, one banker said the goal of liquidity is being achieved even without 100% participation. "The point of it was liquidity and I think we already have liquidity."
