Babson Capital Management has closed the Connecticut Valley Structured Credit CDO III, a $400 million collateralized debt obligation (CDO) that will consist primarily of BBB rated CDO debt securities with a focus on the collateralized loan obligation sector. Citigroup Global Markets arranged the transaction.

The new CDO will be managed by Babson's 17-person structured credit team based in Springfield, Mass., and headed by Matthew Natcharian.

This is Babson's fourth CDO of CDOs. The other three comprise the Connecticut Valley Structured Credit CDO I, which is for $400 million and was completed in September 2001; the Connecticut Valley Structured Credit CDO II, which is for $350 million and was completed in May 2003; and the Pioneer Valley Structured Credit CDO I, which totals $1 billion and was organized in July 2005.

"CDOs of CDOs have become increasingly popular with investors in recent years, as they provide a capital- and cost-efficient way to obtain diversified exposure to CDO securities," said Cliff Noreen, head of corporate securities at Babson, in a statement.

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