Following on from the successful offerings of Nexus 1, 2 and 3 by Deutsche Bank, Nexus 4 - the first foray into a managed CDO by Nexus - has recently announced that it has suffered an event of default in its income portfolio.

According to a statement filed at the ASX by Deutsche Bank on 6 March 2006, as a result of the filing for bankruptcy by Dana Corp (a US automotive parts manufacturer), the coupon payable on the Nexus 4 bond has been reduced by 23% from its original level of 8.54% to 6.58%.

What is surprising about this occurrence is that the Nexus 4 CDO has an active manager of its income and capital portfolios. SG Asset Management, t...