In June of 2002, attorneys from the structured products & derivatives group completed the first collateralized fund obligation (CFO) backed by hedge fund portfolios and assigned ratings by Moody’s Investors Service, Inc. and Standard & Poor’s Rating Services.

The CFO, titled Man Glenwood Alternative Strategies I, or MAST I, issued rated notes totaling $374 million and unrated notes and preference shares totaling $176 million. The proceeds from the issuance were used to invest in hedge funds. A liquidity facility (up to $25 million) and credit facility (up to $125 million) were also established to enable the CFO to access ­additional liquidity as needed to make interest payments or acquire assets.

As the first of its kind, the MAST I CFO was viewed as a cutting-edge transaction within the industry and attracted considerable attention in the financial press. The use and development of CFOs as a new financial product became the subject of numerous panels at conferences throughout the year.