With the addition of an Ambac wrap, last week's 12b-1 fee securitization from Citibank, N.A. - the sector's only remaining issuer - experienced wider distribution and tighter pricing than any previous mutual fund fee ABS. The $133 million Hedged Mutual Fund Fee Trust series 2004-2 deal, with an eight-year final maturity and 2.8-year average life, priced via Citigroup Global Markets at 25 basis points over one-month Libor - 110 basis points tighter than April's double-A rated senior/subordinated deal.
"This transaction had the same turbo structure as previous hedged deals," said Citigroup Managing Director Paul Donlin, noting the natural double-A structure. "We wrapped this to triple-A in order to broaden the investor base and sell bonds to domestic investors, who may not have been able to buy double-A rated mutual fund fee deals," he added.