Calyon is arranging its first CDO backed by commodity trigger swaps - or a collateralized commodities obligation (CCO) - set to close by the end of the month. The transaction, Amadeus 2007-1, references 10 commodities, including base metals, precious metals and energy assets, through a static portfolio of 150 Asian long and short commodity trigger swaps. But the new CCO is launching into what has been a relatively inactive sector, raising the question: Will these exotic' products be seen as an investment alternative for CDO investors in search of diversity?

According to a Derivative Fitch presale report, Cayman Islands-based special purpose vehicle CAREDA Finance Ltd. will issue $70 million in floating-rate notes (consisting of a $30 million three-year triple-A-rated note, a $20 million three-year double-A-rated note and a $20 million three-year single-A-rated note) to invest in the swaps - 75 long and 75 short - which are similar to credit default swaps. Credit enhancements of 16%, 12% and 8% have been provided for the three-year A, B and C notes, respectively.

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