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Derivatives

Scotia Debuts Exchange-Listed CDOs

Scotia Capital has issued the first exchange-listed collateralized debt obligation and has a couple more in the pipeline for the coming months. Frank Ackermann, managing director in the credit derivatives and credit investments group in London, said, "This is the first public offering of its kind and we have more in the pipeline." The firm structured--and listed on the Frankfurt Stock Exchange--a EUR1 billion (USD997 million) CDO for DZ Bank, which closed last week.

Listing the tranches of the CDO on an exchange allows a wider range of investors to participate. The recent deal, dubbed DYNASO 2002, was aimed at German cooperative banks, which require an exchange listing. But, Ackermann said the innovation also puts the products on pension funds and fund managers' radars.

The basic structure of a CDO does not have to be changed to get an exchange listing, but it requires a lot more disclosure, noted Ackermann. "This was not a real hurdle, it was just a higher legal bill," he said.

 

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