After an August when even reputable managers were seen selling bonds as wide as 60 basis points over Libor, of late it has been somewhat rare for a new issue CDO to clear all of its bonds, CDO insiders report. But it appears the $300 million Saratoga arbitrage cashflow CLO from Denver-based Invesco has done just that - with modest oversubscription on almost all classes via lead manager Lehman Brothers.

Saratoga's 46 basis point spread over six-month Libor for the 8.1-year A/L seniors sets an encouraging benchmark for other CDO issuers and less seasoned managers are now marketing triple-A's one to two basis points in back of Invesco. The only tranche not reportedly oversold - the $6.75 million 10.3-year A/L double-B rated D class, cleared at 97.0 with a discount margin of 800 basis points over three-month Libor.

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