Cohen Bros. plans to bring to market more than 15 collateralized debt obligations this year, up from the 11 it launched last year. Most of the growth will come from asset-backed CDOs instead of the trust-preferred CDOs the Philadelphia manager has focused on to date, said Chris Ricciardi, ceo. The growth is part of a plan to expand as the overall CDO market grows.
ABS CDOs are a focus because the arbitrage in that sector is still attractive despite spread tightening, Ricciardi said. As part of the shift, Cohen Bros. is launching CDOs backed by investment-grade mortgage-backed securities, with no buckets for synthetics or other CDOs, to make the deals more palatable to its externally managed real estate investment trust Alesco Financial Trust (SN, 5/8). Alesco was created to mirror Cohen Bros.’ investment strategy in different areas. Ricciardi declined to comment on specific deals in the pipeline.