Singapore’s UOB launches multi-sector CDO

Singapore’s United Overseas Bank (UOB) Asset Management has turned its hand to asset-backed securities, with the launch of a $1 billion managed multi-sector collateralised debt obligation (CDO) deal.

The six-year transaction, called Multi Sector CDO I, is referenced to a portfolio of asset-backed securities and synthetic CDO tranches, and comprises four tranches of notes worth $75 million, rated AAA, AA, A and BBB by Standard & Poor’s. UOB and a relative newcomer to the Asian CDO market, Bank of America, arranged the deal.

It’s UOB Asset Management’s fifth foray into the synthetic CDO market, having launched four investment grade synthetic CDOs since September 2002, arranged in conjunction with Deutsche Bank, JP Morgan Chase and Goldman Sachs.

However, the compression in investment grade credit default swaps this year has prompted the Singaporean firm to look at other asset classes to generate value. “With corporate spreads having tightened considerably in the past 12 months, this is an opportune time to venture into asset-backed securities,” says Terence Ong, senior executive vice-president of global treasury and asset management at UOB in Singapore.