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Derivatives

CDO Investor Mulls Managing Deals

Fubon Securities, the first Taiwan-based securities house to invest in synthetic collateralized debt obligations (DW, 5/5), is considering managing its first deal later this year.

Fubon Securities, the first Taiwan-based securities house to invest in synthetic collateralized debt obligations (DW, 5/5), is considering managing its first deal later this year. Vincent Tsao, deputy manager of the fixed income and derivatives department in Taipei, said the firm is currently in talks with international banks about potential deals. He noted, however, that given the current tightness in credits, it will likely wait until spreads widen out, which it expects to happen in the third quarter.

The securities house will probably keep the equity tranche of any structure it manages and sell the remainder of the deal. "By keeping the equity tranche it would boost investors' confidence," said Tsao. The CDO would be referenced to a portfolio of global names, but Tsao said it was too early to further elaborate on potential structures or sizes.

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