Jefferies Capital Partners and David L. Babson are readying a $200-250 million high-yield collateralized debt obligation called Jackson Creek for pricing within two weeks, says a CDO market participant. JCP and David Babson will be joint collateral managers. Jefferies & Co. is the lead underwriter. This deal is believed to be the first high-yield CDO of the year. High-yield CDOs have fallen out of favor due to downgrades. The market saw only a handful of such deals last year. It is the first time JCP, the asset management arm of Jefferies, will be involved in the collateral management of a CDO.
Michael Ogan, head of CDO structuring at Jefferies & Co., declined comment. Mark Senkpiel, portfolio manager at Jefferies Capital Partners in Los Angeles, did not return calls. Drew Dickey, head of the CDO structuring group at Springfield, Mass.-based David L. Babson, declined to comment.
Indicative pricing was only available for the triple-A rated notes at 65 basis points over six-month LIBOR. No price talk was available on the mezzanine tranches.
Another CDO market participant speculates that Jefferies is using the high-yield expertise of Senkpiel, former co-manager of the TCW Galileo High-Yield Fund, who joined Jefferies last November from Trust Company of the West. It remains unclear why more than one collateral manager is involved in this deal. Market participants suggest that it is because high-yield CDOs are a tough sale, especially with a first time collateral manager such as JCP. High-profile David L. Babson should help investors gain confidence in the transaction, they say.