BNP Paribas is road showing a collateralized debt obligation in Europe and Asia managed by BlackRock Financial Management, the U.S. manager with over USD414 billion under management. Nicolas Christen, senior structurer at BNP in London, said investors in these regions are hungry for synthetic transactions managed by U.S. groups. "In a market where CDO portfolios usually comprise a majority of U.S. assets, and at a time when U.S. credits offer higher spreads, bringing a U.S. manager to the market makes sense," he said.
The EUR325 million CDO, called Palladium, offers AAA to BBB-rated notes linked to a portfolio of predominately investment-grade U.S. corporates, with a spattering of emerging-market sovereign exposures. BlackRock will manage the portfolio throughout the life of the seven-year trade and has the ability to short up to 10% of the underlying. Officials from BlackRock in New York did not return calls by press time.
Palladium is expected to be priced next week and is being marketed in Asia and Europe to banks, insurance companies and funds. Notes will be issued in euros, U.S. dollars or yen. "We expect a first issuance mid February followed by taps," Christen said.