If not, then nobody told Trust Company of the West, which is putting the final touches on two emerging market collateralized debt obligations.
The first deal, called TCW GEM Leveraged Investment Grade Opportunities (LIGOS) CDO, is worth approximately $305 million, and will be an investment-grade average CDO. Morgan Stanley is lead manager. LIGOS is expected to be backed 100% by emerging market debt, and should price in early May. Between 70% and 75% of the transaction will be investment grade and the remaining will be speculative grade. The speculative grade bonds cannot fall below the B1/B+ threshold.
The pool will be made up of EM sovereign debt, EM investment-grade corporates, EM ABS, and EM high-yield corporates, weighted in that order, buyside sources said. LIGOS is expected to have a high teens asset backed bucket and a large chunk of IG sovereign bonds to get the investment grade average rating on the collateral.
It is expected that the senior class will feature a triple-A wrap with talk starting at 50 over Libor or below. A single-digit equity bucket is expected, and the deal should have a 12-year final maturity.
TCW is also marketing a Euro-denominated deal via Deutsche Bank's European CDO team. GEM VI is worth between E300 million to E400 million, backed 75% by global emerging market debt and 25% European high-yield bonds. Like LIGOS, the senior notes on this deal will likely involve a monoline, sources said. Apparently, the equity in the deal is fully placed. A June closing is expected.
Meanwhile, the firm priced its Select Loan Fund CDO via Deutsche Bank last week, with the triple-A's printing at 46 over Libor.
One investor on the top class said it was an easy sell as TCW is one of the most experienced CDO managers in the market. Early on sources said TCW was marketing the equity at an approximate 16% interest rate. TCW Group has an $80 billion portfolio of assets, of which $37.5 billion are fixed-income. The firm has 300 investment and administrative professionals.
Other deals circling
The Clinton Group, a New York-based hedge fund, is prepping its second annual arbitrage CDO, and has yet to name a lead manager, market sources said. The Clinton Group's last CDO was a synthetic deal arranged by Bear Stearns called Chambers.
Also, Salomon Smith Barney was marketing the equity on a some-odd $300 million high-yield bond CDO for Loomis Sayles & Co. The deal is scheduled for launch in mid-May, sources said. Reds have yet to be released.
Salomon is also still marketing Ascension for Conseco Finance.