On the sidelines since December 1998, asset manager Indosuez Capital is finalizing the equity on what will be the company's sixth collateralized debt obligation to date, said group co-head Daniel Smith.

With a target size of $500 million, the CDO, called Indosuez Capital Funding VI, will be backed 75% by high-yield loans (loans to companies with non-investment grade ratings) and 25% high-yield bonds and mezzanine debt.

Salomon Smith Barney is underwriting the transaction with Chase Securities as co-manager. IC hopes to close the deal by the end of the month.

No stranger to market, New York-based Indosuez issued its first CDO in 1993, long before collateralized debt instruments were commonplace.

"There were deals done pre-1989, and then it stopped completely, and then started again," Smith said. "We've been doing it longer than most. We were one of the earlier issuers."

Among other changes in the CDO market since 1993, the investor base has grown, Smith said, and the technology used in rating and structuring the transaction has evolved.

Although IC has been issuing roughly one deal a year - and currently has more than $3 billion in assets under management - the company structured no funds in 1999 due to adverse market conditions.

"It was a tough market and we wanted to make sure we had full control over the deals we had," Smith said. "We wanted to make sure we spent all our time looking over those portfolios, working on the credits, and we didn't necessarily think it was a good time to be distracted with fund-raising."

As it turned out, it was a good call, Smith said.

"While we've had our troubles like everybody else, our portfolios are holding up fairly well," he said.

If Indosuez launches another deal this year, it will likely be more specialized, and not a typical CDO, Smith said. "We really do it one deal at a time," he added. "We try not to overload our infrastructure."

Indosuez Capital, formed in 1992, is the U.S. merchant banking and asset management component of Credit Agricole Indosuez.

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