In what investors are calling a creative unloading of distressed loans, Banc of America Securities was last week premarketing a $500 million arbitrage cashflow CDO backed 60% by distressed loans and 40% by ABS (giving current pay coupon). This is the first visible distressed debt CDO with a significant portion of ABS. MBIA is wrapping the transaction, called Endeavor 2001. Asset manager on the deal is PPM America. E&Y Capital Advisors is acting as subadvisor and backup asset manager.

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