DBS completes pioneering synthetic CLO

The bank successfully moves credit risk off balance sheet and improves its capital adequacy ratios.

An S$224 million transaction was priced yesterday Wednesday almost bringing to a close a complex exercise in balance sheet management. The six tranche deal, which represents the mezzanine level of a S$2.8 billion synthetic securitization, priced in line with expectations after a few late minute structural tweaks.

Although originally, there were four mezzanine tranches all denominated in Singapore dollars, joint lead managers DBS and JPMorgan decided to add two additional dollar-denominated tranches to satisfy offshore demand and shift some local investors out to the two top rated tranches and into the two lower rated tranches where there was less overall demand.

Hence the final structure of the deal comprised S$42 million in BBB...

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