Structured Finance Advisors, a specialist asset-backed securities manager with approximately USD3.5 billion under management, is preparing its fourth collateralized debt obligation and is considering making the new issue synthetic, having previously issued cash deals.
An official at the firm in Farmington, Conn., said the manager is weighing the possibility of its first synthetic deal due to the increased liquidity and flexibility of credit-default swaps when compared with cash bonds. The pricing of cash ABS spreads has become less attractive to investors, and if the firm decides a synthetic structure will offer better performance than its cash equivalent, it will go down that road, he noted.
The CDO, which is being prepped for launch in the second quarter, will likely be USD250-USD300 million, according to the official. Details on the number and diversity of credits in the portfolio have not yet been determined.
