The idiosyncratic features of hedge funds peg these investment vehicles as peculiar birds, albeit birds with a nice upside potential. Market sources report CDO investors are anxious to gain exposure to hedge funds via collateralized fund obligations, and a few have reportedly hit the U.S. pipeline.

Market sources report that Concordia Advisors is in the market with a $100 million CFO called Concordia Funding 1, led by Salomon Smith Barney. The deal, with a weighted average life of three years, features an $80 million top tranche reportedly rated Aa3'. Additionally, UBS O'Connor has been marketing UBS Alpha 1 for quite sometime now, reportedly a $500 million CFO lead managed by UBS Warburg; sources report the $260 million triple-A tranche has price talk of 60 to 70 basis points over the 12-month Libor. Finally, a $300 million deal from Societe Generale, named Societe CFO 1, is also in the U.S. pipeline. That deal is reportedly co-managed by Deutsche Bank and Societe Generale.

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