Since its inception more than a year and a half ago, brokerage firm Pali Capital's CDO structuring business has provided new options for middle market insurance companies, smaller banks and wealth management firms that focus on alternative investments. Pali has done this by developing CLO vehicles and credit default swap (CDS) CDOs that better fit the needs of middle market clients. These investors, not often coveted by larger banks, tend to have shorter duration and lower risk expectations.
"We decided to go after another set of potential buyers," said Luis Marino, managing director and head of fixed income sales and structured finance at New York-based Pali, explaining that his firm didn't want to compete with big banks for CDO structuring business. Instead, Pali decided to meet demand from the middle market for CDO vehicles with shorter maturities, less leverage and more flexibility.