Western Asset Management is about to start showing investors its first collateralized debt obligation since early 2002.
The Pasadena, Calif., money manager’s $500 million offering, called Coronado, will be backed by a mix of structured products and investment-grade corporate bonds and loans. Deutsche Bank will run the books on the transaction, which is expected to price early next month.
The planned CDO will be similar to Western Asset’s two previous issues, which Deutsche also handled. The first deal, a $400 million transaction called Arroyo, priced in July 2001. The other, named Pasadena, totaled $500 million and priced last May.
Unlike those issues, however, the $382 million senior tranche of Western Asset’s next offering will feature an MBIA guarantee. The triple-A-rated policy will presumably make the securities more attractive to investors who have been put off by the CDO market’s sluggishness.
For the most part, Coronado’s collateral pool will consist of asset-backed securities, other CDOs and residential- and commercial- mortgage bonds. Western Asset, a unit of Legg Mason, currently manages about $50 billion of such assets via its CDOs and on behalf of institutional investors.
In addition to the deals that it completed on its own, Western Asset oversees a pair of structured-product CDOs that ran into trouble under their original managers. In November 2002, it took over for Asset Allocation Management of New York as the manager of DASH II CDO. In April, it stepped in as manager of Beacon Hill Asset Management’s first CDO, six months after the Summit, N.J., firm’s hedge-fund business collapsed.
Copyright HARRISON SCOTT PUBLICATIONS Jul 25, 2003
