Constellation Financial Management has its second deal of the year in the market, a $290 million area Aa2/AA (Moody's/Fitch) floating rate privately placed securitization of 12b-1 mutual fund fees via Bear Stearns. The deal is indexed over three-month Libor.

Bear is also the warehousing agent for the transaction, sources said. Differing from 12b-1 fee deals that have seen ratings volatility, Constellation has added a new put option hedge feature that ties the deal's performance to equity market indices such as the S&P 500, which acts as added credit enhancement.

Though the sector saw significant ratings migration last year, which followed plummeting asset values in the equity markets, several deals, from both Constellation and its main competitor Citibank, have closed below the radar screen with new equity hedge protections built in them.

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