Although the Asian securitization market has shown marked signs of sophistication in the past couple of years, the synthetic business - especially for arbitrage transactions - has yet to take off in the way most experts had hoped. There are good reasons for that, many related to supply-side issues, but perhaps the critical factor was that Asian investors were not convinced about the merits of arbitrage synthetic deals.
A case in point was the $121.5 million Spectra 1 transaction that ING and OUB Asset Management tried to issue in November 2001. Backed by a portfolio of $450 million of credit default swaps CDS, the deal offered yields ranging from 45bp over three month Libor...