Domestic bliss...at a price

CDO transactions denominated in Asian currencies are being shown to investors, and for those who cannot hold US dollar- or euro-denominated assets, these structures are particularly attractive. Yet how feasible are these deals? And are cash deals more attractive to investors than synthetic deals? By Aileen Saw

Asian investors and asset managers have seen collateralised debt obligations (CDOs) in every asset class and structure: cash and synthetic, high yield and investment grade, various portfolio combinations, currency alternatives. Competition for innovation is fierce. Reception is varied.

When a new product comes to Asia, it is first introduced in US dollars. As investors become more familiar with a product, they begin to take on more risky asset classes and tranches. With increased exposure to