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Cash CDO Manager Preps Synthetic Plunge

08 Dec 2006

Collateralized debt obligation manager Princeton Advisory Group, based in Princeton, N.J., is planning its first venture into synthetic CDOs.

Collateralized debt obligation manager Princeton Advisory Group, based in Princeton, N.J., is planning its first venture into synthetic CDOs. The group already manages over USD6.2 billion in mortgage and asset-backed CDOs and leveraged loans and is now looking to get into high-grade corporate synthetic credit.

As part of the push, Princeton has hired Chicago-based David Hays, previously at WestLB Asset Management and Marc Levin, from UBS. David Tankin, cio in Princeton, said that while corporate synthetic spreads are tight and the market has been tough for new issuers, the fund saw the opportunity to hire two senior synthetic CDO managers and took it. "It's tougher to do a deal but better to get the right people in while you can," he explained.

The manager has no plans as yet for its first issue, but Tankin said it would likely be around USD300-USD500 million in size and be a full capital structure investment-grade structure. Once the group is up and running, it may also consider single-tranche CDOs. The synthetic unit will market to investors from among Princeton's existing bank and insurance company client-base, as well as new investors, said Tankin. The firm works with a selection of investment banks and looks to choose dealers that have structuring expertise and experience, as well as a strong sales force to help market its CDOs.

08 Dec 2006