Credit derivative structurers are expecting a flood of managed constant proportion debt obligations to hit the market as soon as they are given the green light from rating agencies.
Structurers said there will be a race to launch managed CPDOs even before the index roll in March because there is a sense among dealers they missed the boat on the first generation of CPDOs last fall. By the time most dealers started structuring static CPDOs, spreads had tightened too much to be able to execute as promised (DW, 12/21).
Market participants expect imminent ratings guidance on index-based and bespoke investment-grade deals from Moody's Investors Service and guidance from Standard & Poor's to follow in a few weeks, but the exact timing could not be confirmed. "We're at the mercy of the ratings agencies," said one structurer.
