WestLB is prepping its first two synthetic arbitrage CDOs, which it plans to begin marketing late this month or early next. The first of the two will be managed and the second will be static, according to Janet Tavakoli, executive director in credit derivatives in London. The deals are being driven by customer demand, she said.
The reason the managed deal will come first is that the hired manager will make fundamental decisions on the credits included in the transaction, whereas with the static CDO, WestLB needs to make decisions. Tavakoli would not divulge the size of the two deals or who the manager would be on the managed CDO.