RBS plans to buy back synthetic CDO notes

RBS has announced that it is aiming to buy the notes from three synthetic CLOs. The bank has sought to modify the terms and conditions in the deals to enable it to buy all the outstanding notes in these CLOs. The deals subject to the bank’s interest are Skye CLO, Lunar Funding I and Solar Funding I, three transactions that the bank structured.

Investors are getting together over the course of the next month to decide on whether or not to approve the modifications to the terms and conditions. RBS has already submitted offers for the notes but a final purchase price is set to be determined by a modified Dutch auction.

This could be a move by the bank to de-risk by redeeming some of its synthetic CLOs – a strategy that Citi and KBC have used this year. Creditflux reported a couple of months back that RBS Asset Management had placed Kintyre CLO up for sale. That process is believed to be close to completion.

RBS has set a deadline of 31 January for its offers to be accepted. The bank declines to comment on its plans.