Wachovia Securities' Structured Products research team just issued its inaugural CDO Performance Report, a new information tool that incorporates regular updates.
Wachovia has led, co-led, or co-managed 60 CDOs since August 1998. It is now making details about these sensitive vehicles publicly available. Best described as a comprehensive deal performance report, Wachovia profiled 22 of those CDOs in its first CDO Performance Report, with plans to roll out the remaining transactions' performance by year's end. In a two-prong effort, a hard copy will be released quarterly but plans are to update performance information on a near real-time basis through Wachovia's Web site.
"Clearly the emphasis in the last year has been improving transparency in the market. We have moved to create a snapshot of transactions that, in four to six pages, will provide investors with a quick understanding [of each transaction]," said Jeff Prince, CDO research analyst at Wachovia.
While trustee reports are the obvious source of deal-specific information, trolling through nearly 100 pages to find out specifics is not what many would equate with speed-of-business. Of course, Wachovia isn't the only investment bank on the Street providing CDO performance statistics. Prince argues his firm's stab at transparency offers something "more complete" than some of the competition.
"We're providing more than the standard surveillance items," he said.
For example, Wachovia will provide a list of the top 10 obligors by notional amount in each CDO transaction. It will specifically break out obligors rated triple-C and below, and will provide industry breakouts of collateral.
In all, the process had a green light from insiders at the firm from the start. "Some collateral managers had concerns, but not because they didn't want the information out there," said Prince. "There are just a few logistical issues that need to be worked out."
With more information available, the less confusion in the market. Dealers reduce the inquiries they field because information is easier to come by. And collateral managers gain a boost through increased secondary market trading.
"This effort is probably unique among investment banks, as the platform we built allows us to be more comprehensive in our reporting and requires relatively low overhead," Prince said.