SG marketing CPDO
Société Générale Corporate and Investment Banking (SG CIB) is marketing its first constant proportion debt obligation (CPDO). The deal, called Stelaris, will feature a short bucket.
As credit spreads continue to contract to record tight levels and spread widening is anticipated, structurers have sought to introduce a short capability into many types of structured credit transactions. For Stelaris, SG CIB has included a short bucket so that when spreads widen, the transaction will benefit. The deal will be taking long positions on the five-year iTraxx and the Dow Jones CDX credit derivatives indexes, and short positions on the 10-year version of the indexes.
Investment banks have wrangled with how to improve upon the first CPDO, called Surf, launched by ABN Amro last summer (see: A new twist).
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