UBS Warburg apparently plans to keep PaineWebber's Cabco program going.
The firm recently filed an S-3 with the Securities & Exchange Commission to issue off the Corporate Asset-Backed Corporation trust, which allows the bank to do interesting things like packaging corporate bonds and redistributing exchange-listed securities backed by cashflows derived from trust, according to a source close to the investment bank.
The trust allows the filer to separate the stream into principal and interest, or combinations thereof.
Also, the filing would also allow UBS to structure index-linked securities, similar to Salomon Smith Barney's Tiers asset-backed program, whereby Salomon sells securities via the New York Stock Exchange, sometimes backed by a triple-A-rated pool of credit cards, with a coupon linked to an industry stock market index.
Salomon, through its Corporate Backed Trust Securities (Cort), and PaineWebber, through Cabco, are credited with being the first banks to bring bond-backed stocks, which are essentially similar to trust preferred securities, to their clients, in the mid-to-late 90s, according to published reports. Lehman Brothers is also said to be active in this arena.
