Singapore’s UOBAM manages third synthetic CDO

Singapore’s UOB Asset Management (UOBAM) has once again moved into the synthetic collateralised debt obligation (CDO) market, managing its third transaction deal in eight months. This time, Goldman Sachs is the co-arranger of the transaction with UOB, following the firm’s strategy of experimenting with all the region’s top credit houses.

Called United Global Investment Grade CDO III, the deal is the largest synthetic CDO to be managed by an Asian asset manager to date – just. At $1.702 billion, it beats UOBAM’s previous transaction, structured by JP Morgan Chase last December, by just $2 million. Like the asset manager’s previous two transactions, the portfolio incorporates US, European and Asian investment grade credits, and UOBAM is allowed to trade the underlying names in the event of any deterioration in credit quality.

UOBAM made its first foray into the synthetic CDO market as a manager last September, in a $1.33 billion deal arranged by Deutsche Bank. It followed up with United Global Investment Grade CDO II, co-arranged by UOB and JP Morgan Chase, just two months later.

“The current economic environment makes this transaction especially attractive to investors seeking enhanced returns to a diversified portfolio of global credits,” said Terence Ong, senior executive vice-president, global treasury and asset management, at UOB. “We also feel that the timing is excellent, as we foresee spreads of investment-grade corporate credits tightening.”