Singapore's Straits Lion Asset Management, with more than SGD20.2 billion (USD11.78 billion) in assets, recently launched a synthetic collateralized debt obligation which several credit traders believe is the first such local currency deal. Straits Lion entered a currency swap to convert the USD1 billion pool of predominantly Asian credits into Singapore dollars to entice domestic end users. "Without having to worry about currency risk, this type of deal is quite favorable for local investors," said Teresa Chan, marketing manager. The CDO is the firm's third managed deal.
Straits Lion will manage the portfolio and retain the BBB tranche. Officials at the investment house declined to comment further, as the deal will close this week. Lye Thiam Wooi, v.p. and head of global markets, said it has additional deals in the pipeline, including a cash CDO that will be finalized within the next few months.
"This is the first Sing dollar deal I've heard [of]," said a credit head at a bulge bracket house. He expects more regional currency deals to take flight, given that end investors in Asia now have greater familiarity with the products and most tend to hold a majority of their portfolios in their home currencies rather than in U.S. dollars.
