Just a week after industry players gathered at Information Management Network's ABS East event — where securitization players still seemed down on the prospects of a CDO market staging a return — Citigroup is reportedly marketing a rated CDO.
Denmark’s Sydbank will act as portfolio manager of the $150 million new issue that could be ready next year, pending the credit ratings process.
The CDO will give investors exposure to emerging market credit and foreign exchange risk, according to published reports.
There have only been three CDO deals in Europe this year, compared with 37 last year. For the most part, post-credit crunch CDOs have reportedlybeen private bespoke trades. Market reports indicate the new transaction from Sydbank will target traditional CDO investors.
The deal will also be one of the first CDOs linked to emerging markets and one of the first to use leverage since the credit crisis happened.
It follows in the wake of Citi's Evolution EM CDO and, the more recent though unrated, Enterprise CDO, which were also managed by Sydbank.
On the RMBS front, the U.K market has successfully priced two publicly rated deals over the last two months.
In September, Lloyds Banking Group sold £1.65 billion ($2.7 billion) and €750 million ($1.11 billion) of mortgages and last month Nationwide topped up primary issuance with a £2.25 billion deal. Both transactions were well received.
Both RMBS deals stemmed from a reverse inquiry made by JPMorgan.