Almost one year to the date of its first-ever CDO issuance, Maxim Advisory last week brought to the market its first CDO backed by mezzanine-grade RMBS collateral. The deal is the fourth for Maxim, a unit of broker-dealer Maxim Group LLC.

The $503 million deal, named Lexington Capital Funding closed via lead manager Merrill Lynch last Tuesday. The $335 million of triple-A rated A1 paper, maturing May 2042, priced at 27 basis points over 3-month Libor. The $72 million triple-A rated A2 tranche priced at 45 basis points over 3-month Libor, while the $44 million double-A rated B class priced at 60 basis points over 3-month Libor. The deal, maturing January 2041, has a 120-day ramp-up period, a three-year substitution period ending in 2008 and carries a triple-B to triple-B minus weighted average rating factor, according to Fitch Ratings.

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