The deal involved the establishment of an Australian repackaging vehicle and the issuance of $75 million Mahogany notes backed by credit-linked notes of Saphir plc, a Lehman-arranged Irish CDO issuer.

The Mahogany note issue was the first Australian retail repackaged issue with a combo note structure involving rated principal and unrated interest, with Standard and Poor’s commenting that the fixed recovery rate for these noteholders is a notable feature. The underlying Saphir note performance is linked to a $7.5 billion portfolio of 150 credits.

The BDW team was led by securitisation partner Tessa Hoser and involved securitisation, corporate, tax and intellectual property lawyers which managed the Australian legal, regulatory and tax aspects and co-ordinated advice from overseas counsel.

Hoser said the deal was interesting because it “involved equity and debt capital market techniques”, had “an unusual and reasonably unique ratings structure” and was very successful commercially, with the issue oversubscribed.