HVB closes $1 billion CDO

Germany’s Bayerische Hypo- und Vereinsbank (HVB) has closed a $1 billion hybrid collateralised debt obligation, according to an official at the German banking group. The transaction was structured by HVB in Singapore, and HVB Asset Management Asia is the collateral manager.

As part of the transaction, Cayman Island-registered special-purpose vehicle Artemus Strategic Asian Credit Fund is issuing four classes of secured floating-rate notes due in March 2010. There is also a super senior tranche worth $800 million and an equity tranche worth $20 million.

Artemus is issuing $127 million of class A notes rated AAA by Standard & Poor’s and Fitch and Aaa by Moody’s Investors Service; $20 million of class B notes rated AA and Aa2; $20 million of class C notes rated A and A2; and $13 million of class D notes rated BBB and Baa2.

The hybrid CDO is referenced on a portfolio expected to comprise $120 million in cash bonds, most of which are asset-backed securities, and $880 million of synthetic securities, including sovereign and corporate exposures. BNP Paribas, Deutsche Bank and JP Morgan Chase are credit default swap counterparties.

Geographically, the portfolio has a 50% exposure in the Asia-Pacific region, including Japan, Australia and New Zealand. The other half of the portfolio has US and European exposures. In terms of placement, the HVB official said the transaction was sold globally.