CPDOs - A true sense of proportion

A new generation of constant proportion debt obligations is emerging, with novel features including flexibility in the timing of the index roll, the addition of a manager and greater ability to go long or short individual credits. Duncan Wood looks at the latest products to emerge

Champagne is starting to flow in the constant proportion debt obligation (CPDO) market, as the arrival of new rating methodologies allows banks to finally uncork deals that have been on the shelf since the end of last year. Lehman Brothers closed the first lightly managed deal in April, while ABN Amro expects to close the first fully managed transaction in the coming weeks (see box).

A slew of other managed deals are close to launch, but arrangers are also bringing out fresh unmanaged - or static