Terwin Money Management, the buy-side arm of a structured products specialist, is looking to manage its debut collateralized debt obligation and plans to be a regular issuer of structured finance liabilities. Terwin is seeking investors for a roughly $300 million CDO that will be made up mostly of residential mortgage collateral, according to sell-side officials, who say Terwin plans to sell as many as three CDOs this year. The money management firm is part of The Winter Group, an originator and trader of mortgages that was founded in 2002 by Rich Winter, the former co-head of the residential mortgage group at Credit Suisse First Boston. Merrill Lynch is underwriting the deal, which is not expected to close until next month at the earliest. Winter referred calls to Sam Rainieri, a Terwin manager who is responsible for the transaction. She did not return calls. Chris Ricciardi, head of the structured credit group at Merrill, was traveling and could not be reached by press time.
In addition to residential mortgages, the upcoming transaction will have small buckets to repackage commercial mortgage-backed securities and other CDOs. However, the majority of the deal will be in residential mortgages, given that is the Winter Group's specialty, explain one official familiar with the offering. The deal is dubbed Glacier. Another outsider says the deal is noteworthy because it will include collateral that Winter Group has been involved with on a soup-to-nuts basis, by originating, securitizing and then repackaging the same collateral into the offering. One CDO official adds it makes sense for an originator to have a buy-side subsidiary, because it acts as a natural buyer for its collateral. However, this transaction's indenture limits this type of collateral to no more than 5% of the underlying assets, according to a rating agency official who is reviewing the offering.
