Trust Preferred CDO Set For Pricing

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  • 17 Mar 2003
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First Tennessee and Keefe Bruyette & Woods are expected to price a $500 million trust preferred securities collateralized debt obligation today, says a CDO market participant. Called Preferred Term Securities IX, the deal is backed by 40-50 different trust preferred securities issued by banks and thrift institutions, says Sajjad Hussain, an analyst at Fitch Ratings. There is no collateral manager as the transaction is a static pool. Pricing information was not available at press time. Calls to the bankers, Ron Dipasqualle at KBW and David Howe, at First Tennessee, were not returned.

Trust preferred securities are hybrid securities that are debt instruments enjoying equity treatment for regulatory purposes. They allow small- or mid-size banks with $180-600 million in assets to gain capital relief as they can issue those instruments in addition to their capital base rather than against it, says Hussain. Banks and thrifts are packaging these securities into CDOs to access the capital markets in a way that is cheaper than stock issuance while offering favorable capital treatment.

This transaction's collateral pool may include up to 5% in trust preferred securities issued by insurance companies, as those typically provide for more yield and more diversification than bank-issued trust preferred, adds Hussain.


  • 17 Mar 2003

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 BNP Paribas 5,997 17 15.40
2 Citi 4,679 16 12.02
3 Lloyds Bank 3,158 6 8.11
4 Bank of America Merrill Lynch (BAML) 3,104 10 7.97
5 Morgan Stanley 3,066 8 7.88

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 69,310.90 231 10.40%
2 JPMorgan 64,579.62 197 9.69%
3 Wells Fargo Securities 51,322.59 157 7.70%
4 Bank of America Merrill Lynch 50,413.91 166 7.56%
5 Credit Suisse 47,114.03 149 7.07%