The market may begin to see increasingly more re-issued market value CDOs. That's because a significant amount of market value CDOs, which have performed relatively well, were launched in the late 1990s, so the first crop of such deals is reaching maturity now, according to Joo Hong, associate director at Fitch Ratings. Traditional market value CDOs typically have maturities of seven to eight years, while credit opportunity funds generally mature in five years, a CDO underwriter said.
Sankaty Advisors, a Boston-based credit affiliate of Bain Capital, is one firm that has decided to re-issue its $1 billion market-value CDO - Sankaty High Yield Partners II - and extend the deal for another two years. Late last month, Sankaty issued notes to refinance obligations from its original 1999 market-value CDO. The fund's portfolio consists of about 80% in bank loans and high-yield bonds, while it also invests in a variety of other assets, such as distressed debt, private equity, mezzanine and structured products. Fifteen-month old Halyard Securities, an affiliate of Precision Capital Advisors that includes six former Deutsche Bank Securities CDO professionals, arranged the refinancing for Sankaty's market value CDO. Deutsche Bank had underwritten a significant amount of the market value CDOs that emerged in the late 1990s.