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Spreading the load of distribution

Structured credit is becoming a syndicated market. At the forefront of this development is JPMorgan, which in April structured and launched the first syndicated single-tranche collateralized swap obligation, a CDO whose underlying reference portfolio consists of credit derivative swaps. Aria CDO 1 is an active deal managed by AXA Investment Managers. JPMorgan recruited a five-strong group of selling banks to distribute the deal just as it would involve co-lead arrangers to sell a corporate bond.

?Aria is changing the way structured credit is distributed,? says Ian Slatter, managing director, European credit sales, at JPMorgan. ?The days of having to place the full capital structure are over.? Of the investors who bought Aria, 18 were participating in their first structured credit deal.

Aria didn't keep its market-leading status for long. At the start of August Goldman Sachs and Calyon launched Ocelot, a e5 billion synthetic CDO programme managed by Prudential M&G on which the banks are joint arrangers.

?We've set this up as if it were a flexible MTN shelf that we can tap over time,? says Vishal Gupta, head of credit and equity exotics at Goldman Sachs. In the past, meeting investor demand for e200 million or e300 million trades hasn't been feasible because of fixed costs, such as getting a rating.

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