Morgan Stanley priced Deerfield Capital Management's latest CDO last Tuesday, a $1 billion notional, arbitrage managed synthetic IG CBO called Palmetto Synthetic CDO Ltd. The triple-A notes on the five-year bullet priced at talk, 60 basis points over three-month Libor. Each class appears to have cleared within guidance, except for the often-challenging Aa2'/AA' (MDY/S&P) tranche that priced at 100 basis points over three-month Libor, versus initial guidance of 85 basis points over three-month Libor.

The pool of IG corporates will have a Baa1'/Baa2' average rating and a 1.5% issuer concentration limit on A3' and above credits.

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