KIDDER UNIT SELLS CMOS, INCLUDING FLOATERS
Kidder, Peabody Mortgage Assets Trust
Five, a unit of Kidder, Peabody and Co Inc, is offering 500 mln
dlrs of collateralized mortgage obligations in seven classes,
including floating-rate and inverse-rate tranches.
    Sole manager Kidder Peabody said the first floating-rate
class has an initial rate of 6.755 pct that will be reset
quarterly at 40 basis points over three-month LIBOR, with an 11
pct cap.
    Totaling 53.3 mln dlrs, this floating-rate class contains a
so-called catchup provision that allows investors to recapture
possible lost interest, according to Kidder Peabody.
    For instance, if three-month LIBOR rises to 15 pct during
the life of the floating-rate tranche and falls back below the
11 pct cap, investors would be paid back, dollar for dollar,
the amount of interest they would have received if the CMOs did
not carry a maximum interest rate, a Kidder officer said.
    Kidder Peabody introduced this concept on February 12.
    The other floating-rate class totals 132.4 mln dlrs and has
an initial rate of 6.975 pct that will be reset quarterly at 60
basis points over three-month LIBOR, with a 13 pct cap. This
tranche does not have a catch-up provision, the Kidder officer
said.
    The inverse-rate tranche totals 71.3 mln dlrs and has an
initial rate of 10.903 pct. The rate will be reset quarterly
according to the formula of 22.44027 minus the product of
1.8097 times three-month LIBOR.
    Yields on the remaining fixed-rate CMOs, the balance of the
500 mln dlr issue, range from 7-1/4 to 9.27 pct, or 90 to 160
basis points over comparable Treasuries.
    The issue is rated a top-flight AAA by Standard and Poor's.

 Reuter
