Deutsche Bank is preparing a USD5 billion balance sheet synthetic collateralized debt obligation that is expected to hit the market in May, according to a market official who is familiar with the deal. The product is being structured as a replacement for Deutsche Bank's 1999 Blue Stripe CDO, which has a three-year call that will mature in May.
The CDO will resemble Blue Stripe in that it will be referenced to a pool of corporate loans. Deutsche Bank will use the structure as a way to buy protection on its loan book through credit derivatives.
Investors will be able to buy into the deal through three or four tranches of credit-linked notes likely rated triple A, double A and single A.
