ING Barings debuts with synthetic CDO in Asia

The CDO, which consists mainly of US and European names, will be distributed globally, but has received a great deal of interest from Asian investors, said an ING Barings executive from the structured finance department in Hong Kong. “There are some Asian customers that are pretty interested in the structure. Some of them are quite a way up the learning curve, some of them have some way to go,” he said.

The CDO, managed by a special purchase vehicle (SPV) called Spectra, will contain a number of credit default swaps, with ING Bank, London, acting as the sole counterparty. The reference obligations for the credit default swaps consist of 90 non-sovereign entities, made up of US, European, Australian, and Hong Kong names, with an aggregate notional value of $450 million. The portfolio manager is Singapore’s OUB (Overseas Union Bank) Asset Management, the first Asian portfolio manager to manage a CDO of this type.

The SPV will be issued in four tranches, with the senior class-A notes rated AAA by credit rating agency Moody’s. “There is a fair bit of demand for CDO assets in Asia, both from the investor point of view, as well as from the originators,” said the ING official, adding that the bank will likely arrange similar deals in the near future.

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