When Bank of America came up with the concept
behind the Core Investment Grade Bond Trust several months
ago, it probably seemed an excellent idea. The environment was
after all one where many investors were hellbent on decreasing
exposure to the largest and most volatile individual corporate
names. So what could be better than an aggregate product that
offered them lower transaction costs, a diverse pool of bonds
with an average A3/A- rating and the promise of secondary
market price-making support from the arranging banks?
Unlike similar aggregate bonds such as Morgan Stanley's Tracers
and Lehman Brother's Trains, Core also offered issuers the chance
to raise new money through a potentially large and liquid
transaction. This was attractive, since many frequent issuers were
seeing spreads widen and were loath to offer stand-alone bonds into
a volatile market.
Unfortunately, by the time Core was launched last month it had
failed to...
