Banc of America Securities recently launched its 11th Structured Enhanced Return Vehicle Securities (SERVES), a synthetic securitization product that references a portfolio of senior-secured bank loans managed by Stein Roe & Farnham Inc.
The firm has arranged a $306.3 million SERVES trust and placed $51 million of SERVES notes and certificates with institutional investors
This newest SERVES transaction enhanced the notes' current yield and improved the investors' ability to redeem the notes prior to the final maturity date, said BoA in a statement.
"SERVES enables investors and portfolio managers to take advantage of a positive credit arbitrage without the added time, complexity and cost of a traditional CLO," said Charles McLendon, head of marketing in BoA's structured credit products group in the statement.
Unlike a conventional CLO, risk transference in a SERVES is accomplished using credit derivatives, said Rick Ziwot, global head of structured credit products.
Brian Good, a portfolio manager at Stein Roe's bank loan group, said the new SERVES is still in its ramp-up period and is still purchasing loans.