FleetBoston Financial is planning to launch its first synthetic collateralized debt obligation in the Asian market this year on the back of increasing client interest. "Hopefully we'll have this out in the next few months," said Sean Ko, head of fixed-income in Singapore. He noted the CDO is likely to be a USD500 million balance sheet transaction. However, he added, the firm will also structure arbitrage synthetic CDOs.
The move comes on the back of conversations with clients in Japan, Hong Kong, Korea and Singapore just before year-end, when the firm saw strong interest in the products. "Customers are looking for credit risk rather than market risk," noted Ko. "As yield returns have been shrinking customers are looking for enhanced yield. They're now becoming comfortable with taking structured credit risk," added Ko.