It's quarter-end, league table crunch time, and while the public market was relatively slow, there was hardly breathing room in CDOs last week, with Lehman Brothers, Goldman Sachs, Bear Stearns and others, madly pricing deals.
At press time, Deutsche Bank had priced the year's first market value CDO, a $255 million deal called Bain Capital, with Sankaty High Yield Partners as collateral manager.
In addition to the $255 million in rated notes, the deal includes a whopping $199 million equity piece.
Deerfield Capital is back in the market, with investment grade corporate bond- backed CDO, which is approximately 70% ramped-up, allowing the transaction to move ahead towards an April launch.
Market watchers say the arbitrage is slipping for investment grade CDOs, in part due to the spread compression in corporates, though mostly because the deals are pricing wider than they were earlier in the year.
Sources familiar with the situation said it would be very difficult, but not impossible, to for Deerfield to package the transaction if the ramp-up were to begin at this time.
Meanwhile, Financial Security Assurance is tipped to wrap the top tranche of Valeo, although negotiations are understood to be on going. FSA wrapped the last Valeo transaction.
Deerfield has a reputation of retaining between 40% and 49% of their CDO's equity for their own account, which they are expected to do with this deal.
Meanwhile, CIBC World Markets was marketing the equity of a J.H. Whitney managed CDO backed by two-thirds mezzanine debt and one third high-yield bank loans.
Goldman was out with a CLO for Nomura Asset Management called Clydsdayle, a $400 million cashflow deal. At press, the portfolio was approximately 75% ramped up with a rating factor of 1850 (between Ba3/B1).
Goldman Sachs is also prepping an in-house Goldman Sachs Asset Management (GSAM) CBO III. The bank is targeting the $250 million range, and will pack the deal with high-yield bonds in a cash flow arrangement.
