TD Securities & Grange Securities Ltd Launch Innovative Step-Up Callable CDO Squared Transaction for Australian Investors
London, November 4 (ots/PRNewswire) - Following the successful completion of the recent Kosciuszko transaction, TD Securities and Grange Securities Limited have teamed up again to launch what is believed to be the first step-up callable CDO squared transaction targeted at the Australian investor base.
The transaction, called Hotham, consists of A $54,200,000, AAA rated, 5.5 year maturity, step up, callable, synthetic CDO-squared Notes with 30% subordination and will be issued in early November. Quarterly coupons, based on the outstanding principal amount, of AUD-BBR-BBSW plus 1.00% for years 1, 2 and 3, 1.50% for year 4, 1.75% for year 5 and 2.00% for the last six months are payable provided the transaction has not been called. The transaction may be called at the then outstanding principal amount with the first call at the end of year 3 and annually thereafter.
"After the success of Kosciuszko, our previous transaction with TD Securities, there was still unfilled demand so we were keen to follow up with another offering. Hotham was attractively priced and cleverly structured by TD Securities so we were able to fill the demand and invite existing Kosciuszko holders to top up with Hotham. The lesson learnt from these two deals is that the volume sold is heavily driven by the quality of the transaction and its specific targeting to market demand." says Moray Vincent, Director Debt Capital Markets at Grange Securities.
Similar to Kosciuszko, the Hotham Notes pay interest and principal in part based on the credit performance of a portfolio of eight tailor-made, static, synthetic underlying CDO tranches. Each of the underlying CDOs in turn have an anticipated BBB rating with reference portfolios comprised of 75 equally weighted corporate, financial institution and/or sovereign entities. The underlying CDOs have a total reference portfolio notional amount of A$ 1.807 billion from which a leveraged A$ 45.2 million tranche is used in the Hotham CDO. The credit events for each underlying CDO reference entity are drawn from the standard ISDA credit events i.e. bankruptcy, failure to pay, restructuring, obligation acceleration and repudiation / moratorium.
"The incorporation of a step-up callable feature shortens the investment duration sufficiently to be attractive to investors in the current yield environment, yet provides sufficient value in the structure to allow the payment of attractive coupons." says Philippe Hatstadt, Managing Director, Credit Structuring Global Head, TD Securities, London.
Grange a leading investment banking firm and one of the main distributors of CDO product in Australia, with offices in Sydney, Melbourne, Perth and Brisbane, provides services to private and institutional investors, corporate clients and government authorities throughout Australia and the Asia Pacific region.
Notes to the Editors:
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. In Canada and around the world, TD Bank Financial Group serves more than 13 million customers in three key businesses: personal and commercial banking including TD Canada Trust; wealth management including the global operations of TD Waterhouse; and wholesale banking, including TD Securities. The Toronto-Dominion Bank trades on the Toronto and New York Stock Exchanges under the symbol "TD". TD Securities, the wholesale banking division of the TD Bank Financial Group, provides a wide range of capital market products and services to corporate, government and institutional clients around the globe. Services include the underwriting and distribution of new debt and equity issues, providing advice on strategic acquisitions and divestitures, and daily trading and investment execution.
ots Originaltext: TD Bank Financial Group/TD Securities Inc.
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