Bear Stearns is readying its first trust preferred collateralized debt obligation in which the firm acts as sole lead underwriter, says a CDO participant. Pricing should take place this week or next week, he adds. Bear Stearns participated in TRUPS CDO deals last year called TPres Funding, but that was jointly with Salomon Smith Barney and Sandler O'Neill (BW, 5/20). The collateral of this $309 million CDO, called Tropic Trust Preferred CDO I, consists mostly of new issue trust preferred securities issued by 30-35 small regional banks with whom Bear Stearns has a relationship with, says Sajjad Hussain, a Fitch Ratings's analyst. The rest is secondary market trust preferred securities issued by the same banks. Those small regional banks have $200-700 million in assets, he adds.
There is no collateral manager for this static pool transaction. Bear Stearns is in the process of finalizing the picks of the trust preferred securities, says Hussain. At the CDO closing date, the CDO will simultaneously issue the CDO notes while purchasing the trust-preferred securities backing them. The regional banks will issue those at the same date the CDO closes, he says. Richard Eimbinder, who structured the deal at Bear Stearns, declined to comment on a "live deal."