The volume of CDO bonds currently being marketed on the European front was pushed up to E1.3 billion last week with the issuance of Rhea 1 - a static pool CDO originated by Bank Gesellschaft Berlin.

Also joining the CDO wave were AXA Investment Managers' second synthetic cash flow CDO, a $1.25 billion deal called Khaleej I. According to market sources, both rated tranches paid a substantial premium when compared to AXA's Jazz CDO. The triple-A tranche priced at 65 basis points over Libor, and the single-A minus tranche priced at 190 basis points over. The Jazz CDO priced earlier this year at 47 basis points over Libor for the triple-A tranche and 135 over for its single-A piece. "The deals aren't completely similar, but the pricing difference does not reflect the fact that they are not alike - it just depicts the spread widening that the market has experienced since February," said one market source.

Also out is the Deutsche Bank-managed London Wall 2002-2 CLO backed by E1.8 billion of corporate loans. The deal comes on the heels of the London 1 series, which priced in June this year. Separately, BNP Paribas is marketing Illiad - a E3 billion CDO backed by 17% corporate-credit assets and 83% ABS assets.

Beyond the CDO front, price talk was out for the Telecom Italia property securitization (see ASR 9/23). The monoline wrap by AMBAC will cover two senior tranches with weighted average lives of 6.3 and seven years; price talk has been heard at 43 and 48 basis points over Euribor, respectively. A third tranche is being offered at 85 basis points over Swaps with an average life of 19.2 years. According to market analysts, the transaction has demonstrated spread pickup compared to current trading levels for the similarly structured, UK-based Telereal deal, which is trading its shorter dated paper at 38 basis points over Euribor.

Also pricing last week was Bankiter's E1,025 million Spanish RMBS - Bankiter 4 - backed by prime residential mortgages. It follows the bank's benchmark deal that priced last year. The class A tranche priced at 22 basis points over the 3-month Euribor; the Class B and Class C notes priced at 45 and 120 basis points over, respectively. Portugal-based issue BMORE 3, managed by Deutsche Bank, priced last week as well, again within guidance. The double-A rated paper came in at 32 basis points over Libor, the single-A paper came in at 80 basis points over, and the double-B paper priced at 150 over.

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