RBC Touts Second High-Grade ABS CDO

RBC Capital Markets has hit the road with a USD1.5 billion high-grade collateralized debt obligation, which allows it to substitute deteriorating credits.

  • 17 Mar 2006
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RBC Capital Markets has hit the road with a USD1.5 billion high-grade collateralized debt obligation, which allows it to substitute deteriorating credits. The synthetic transaction is the second from the firm's principal finance arm, RBC Principal Finance, which has collateralized the portfolio with loan and debt obligations and residential-mortgage-backed securities rated A3 and above.

Rob Pomphrett, head of the structured product syndicate in London, said Logan II was structured on the back of investor appetite for its predecessor Logan I. The first USD2 billion deal closed September last year. Unlike the first deal, RBC Principal Finance has the right to substitute deteriorating underlying credits. "There is more ability for them to defensively manage," he noted.

The full capital structure is being pitched to banks and insurance companies globally with six classes of notes rated Aaa down to Baa2 being offered. These pay 40-45 basis points over three-month LIBOR through to 700-750 bps over three-month LIBOR respectively. The senior notes will also be offered in yen, Canadian Dollar and euro and the equity piece can also be priced as principal protected notes. The transaction will be priced at the end of March 27 and close a month later.

  • 17 Mar 2006

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