SPA 2007: CLOs, CDOs could be next target for structured products

By Peter Heap

New York, March 26 - Collateralized loan obligations and collateralized debt obligations could be in the sights of structured products dealmakers, according to panelists at the Structured Products Association's 2007 conference.

Potential investors have been talking about the possibility of buying notes linked to these securities, said Steve Braverman, president of Harris myCFO Investment Advisory Services LLC, during a panel on Retail, High Net Worth and Family Offices at the conference in New York.

Interest has also been percolating for deals linked to municipal bonds such as the slope trade securities tied to the SIFMA municipal swap index.

"It's quite interesting to see some of the cocktail talk because we know in many ways it's somewhat beyond these clients," Braverman said.

"It's definitely getting a lot of conversations," he added.

Rhian Horgan, vice president of JPMorgan Private Bank and global head of its equity derivatives business, also said she had heard the interest - but believes there are better options for the investors concerned.

"Our clients on the higher end are seeing the CLOs and CDOs but the reality is, where we think we can actually add most value is" by directing them to appropriate hedge funds which can add the extra yield that clients seek.

"I do think the complexity of the products makes it hard to find a broad number of investors who have the time - and the market knowledge - to spend going through these investments."

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