Ashmore Investment Management and Singapore-based UOB Asset Management launched the first emerging markets collateralized debt obligation of the year with lead arranger Lehman Brothers in late March, heralding what could be a recovery for the asset class. The Russian crisis brought the issuance of emerging markets CDOs to a screeching halt for roughly two years, but a smattering of deals in 2000 and Ashmores re-entry into the market with a $170 million instrument indicates that investor demand is coming back.

"The timing was right," said Jerome Booth, a director at Ashmore. "Spreads on emerging markets debt are unsustainably high and we were able to lock those spreads in. More importantly, the demand was there." Ashmore was able to place all of the issue, including $22.1 million of Class D unrated preference shares. Typically CDO issuers are forced to hold onto the most subordinated piece of the instruments.

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