Deutsche Bank is putting the finishing touches to Jazz, a new collateralized debt obligation that will provide some CDO investors with far more flexibility than they have hitherto enjoyed. The deal is managed by AXA Investment Managers, a French firm that favors musical names for its deals, and claims to be the first transaction that allows fund managers to fluctuate between cash bonds and credit default swaps.

The idea of such a structure has been floating around the market for the last six months but this is the first CDO to actually implement it in full. In the past, rating agencies have not been comfortable with hybrid structures and the time it takes to make sure that the default language used in such deals is acceptable.

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