Fubon Securities, with over TWD64.5 billion (USD1.88 billion) in assets, is considering investing in a second synthetic collateralized debt obligation, possibly by year-end. The securities house became the first Taiwan-based entity to purchase a CDO tranche earlier this year (DW, 5/4). "It's still an attractive product," said George Huang, senior project manager in the fixed income and derivatives department in Taipei, noting that although credit spreads have tightened in globally, CDOs offer a higher yield than traditional fixed income instruments.
The firm is looking at purchasing a single A or lower rated tranche and investing in the equity portion. The investment will likely be over USD10 million and converted into the local currency.
Huang added that Fubon is speaking with several international houses. "Our choice will depend upon the service, not only the price," said Huang, adding that he is seeking counterparties that will guide it through the entire process, especially portfolio modeling.
