June is turning out to be an important month for a couple of structured investment vehicle (SIV) programs. Mizuho Securities announced plans to roll out a SIV-lite deal collateralized by leveraged loans, and Morgan Stanley arranged a program that includes a fourth tranche, an increasingly popular feature in SIV programs.
The program from Mizuho Securities is actually a SIV-lite. It will use its proceeds to fund leveraged loans because that asset is considered to be more stable than traditional SIV investments, which include residential mortgages and CDOs, said Alexander Rekeda, head of structured credit at Mizuho Securities. Recovery rates are also higher among leveraged loans than other typical SIV assets.