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Collaterized Bond Obligation
- Collaterized Bond Obligation
- The investment objective of this product as an alternative investment is to generate equity-like returns while exhibiting a low correlation with traditional asset classes. A CBO is an asset-backed security supported by an underlying portfolio of primarily corporate bonds. CBOs are created by issuing multiple debt tranches (leverage) to investors in order to finance the purchase of the underlying portfolio (collateral). The different tranches provide for various levels of priority in the underlying collateral. An investment in the residual interest of a CBO is the first loss position. It is a cash flow based strategy that provides current income distributed from available funds on a semi-annual basis. The coupon may be deferred or eliminated depending upon available cash flow. The investment generally has a low duration.
- Lone Star CBO Funding Ltd.
- Lone Star CBO Funding Ltd. is an investment-grade-average collateralized debt obligation (CDO) managed by Sage Advisory Services, Ltd. Co. The Lone Star transaction closed in December 2000 with an initial collateral balance of $300,030,000. Salomon Smith Barney acted as the underwriter.
- Deal Summary
- Collateral Manager: Sage Advisory Services Ltd. Co.
- Closing Date: 12/14/2000
- Initial Portfolio Requirement: $300,000,000.00
- Type: Investment Grade CDO
- First Coupon Date: 6/15/01
- First Call Date: 12/15/03
- CUSIP: 542242AA0 - 542238AA8
- Bloomberg Ticker: LONE
- Payment Frequency: Semi-Annual
- Trustee: Chase Manhattan Bank