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Anyone here knowledgeable on CDOs?


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I understand how CDOs work at a high level, but I am wondering if anyone here could explain how I can (if possible) go about finding CDOs that hold debt obligations of a specific issuer?

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Thanks Ham. Let's say that I am an investment fund interested in investing in the debt of XYZ Corp. I know that XYZ Corp has a bunch of debt, but all of the XYZ Corp's debt securities are currently held within CDOs. Is there any way to find out which CDO's hold the debt? Have you seen any situations where the investment funds are able to connect with the CDOs and buy some of the securities that the CDOs own?

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Thanks Ham. Let's say that I am an investment fund interested in investing in the debt of XYZ Corp. I know that XYZ Corp has a bunch of debt, but all of the XYZ Corp's debt securities are currently held within CDOs. Is there any way to find out which CDO's hold the debt? Have you seen any situations where the investment funds are able to connect with the CDOs and buy some of the securities that the CDOs own?

 

Could you be more precise? Are you looking for something like "TLB issued by Valeant" or "trups issued by random regional bank"? Sorry, I'm just trying to narrow down a good answer.

 

 

 

 

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Not exactly term loans, but closer to that or general unsecured debt, as opposed to Trups (or a real specific security like that).

 

You are talking about CDO/CLO/CBO.

The CDO/CLOs i am aware of, are based on the following:

1. bank loans of companies. or

2. Assed Backed/Mortgage backed securities.

 

CBOs of unsecured debt is pretty rare as far as i am aware. Somebody can correct me if i am wrong.

 

Just an FYI. CLOs/CDOs are Reg 144A. Private Placements. Disclosures are in general not public. You cant get reports that easily. If you are an investor in a particular CDO/CLO they will send you report for that CDO/CLO.

 

If you have good relationship with bonds salesman in one of the big shops, they will pull strings to get information. These are pretty opaque markets.

 

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There are various aggregation products out there that assemble data from trustee reports ... e.g. http://clo-i.com/cloiHome ... if you are just interested in one specific issuer as a one time question, sellsiders could probably help you out as well as their CLO trading desks will be subscribers to a service like that one.

 

That said, if an instrument is so thoroughly put away that your sell-side coverage has had no luck soliciting an offer with your bid in hand, I am not sure how much use this will be.

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Not exactly term loans, but closer to that or general unsecured debt, as opposed to Trups (or a real specific security like that).

 

CBOs of unsecured debt is pretty rare as far as i am aware.

 

That's right, but many CLOs will have a small basket for bonds. Although that's going away given the new Volcker rules.

 

Moody's Analytics for example will have a tool that allows you to search for underlying issuers. There are also others as Morningstar has stated. They are not cost efficient for the small investor.

 

Yes, these are private deals, but loan/bond desks at the dealers should know where things are held. It doesn't matter whether it's in a CLO, hedge fund, mutual fund etc. This is an opaque market but only for those not in the market. It's actually very easy to get information if you're an active investor in these types of securities.

 

Yes you can "buy from CDOs" but it's almost always easier to just go to a bank desk. Also keep in kind CDOs (and especially CLOs) are managed. Major debt investors are the ultimate person that you would be buying from. Ie firms like Blackstone, Oakhill, PIMCO etc. if you have contacts at investment firms you're better off just asking them if they own what you're looking for in any of their vehicles. If you're looking for really tiny issues then go to the middle market securitizers like TICC or something.

 

Hope that helps.

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