Inquiries are reportedly up at the dozen or so financial houses offering access to single-tranche CDO technology. As this sophisticated product gains popularity, one new issue revving up overseas has added a twist to this emerging recipe.
Typically, investors turn to single-tranche collateralized debt obligations to restructure portfolios experiencing credit deterioration. Hitting the market approximately a year-and-a-half ago, little statistical data is readily available about this tailored CDO product. Issuance isn't expected to outpace the more traditional CDO product, nor is it designed to. According to sources, dealers have pumped out between 10 and 20 single-tranche deals globally per year.