CDOs/CLOs

There's little doubt among market participants that in the tainted universe of structured finance, the collateralized loan obligation has the greatest chance of survival. The CLO structure is sound and robust, they said, and CLOs are composed of straightforward assets whose origin is easy to determine. Yet, in a market where these products have to contend with forces stronger than their managers ever imagined, experts are forecasting a tough year for European CLOs-one in which the asset class overall will remain in hibernation, and some individual structures will become extinct.

CIFG Holding, the holding company for CIFG’s financial guaranty subsidiaries, said that John Pizzarelli’s employment as chief executive officer is ending upon the successful completion of a settlement reached between CIFG and its derivatives counterparties and insured bondholders on the company’s troubled structured finance portfolio.

CIFG Holding, the holding company for CIFG’s financial guaranty subsidiaries, said that it, along with its principal shareholders, Banque Populaire Group and Caisse d’Epargne Group, has reached a final settlement with credit default swap (CDS) counterparties and bondholders holding 98% of its gross par outstanding of ABS CDO exposures and certain specified CRE CDO exposures.

To combat a CLO market frozen stiff by a lack of new capital, price declines, and waning confidence, some firms are working on new CLO portfolio strategies to bring in business and keep current clients interested in the loan market.

Jefferies & Co., the principal operating subsidiary of Jefferies Group, hired three senior MBS and ABS institutional sales professionals to the Firm’s growing fixed-income sales and trading platform.

Fitch Ratings yesterday downgraded $10 billion and affirmed $435.9 million of rated notes across 16 CDOs backed primarily by trust preferred securities (TruPS), senior and subordinated debt issued by REITs, homebuilders and financial institutions that specialize in mortgage lending.

KBC group said in a press release last week that it expected its full-year net earning to fall by €900 million ($1.2 billion). This is a result of further downgrades by Moody’s Investors Service made on a range of CDOs held by the group.

Babson Capital Management is ramping up global distribution with the establishment of the global business development group, as well as the hiring of a new global sales head and its first sales leader for Australia.

Gulf Stream Asset Management said last week that it is establishing a credit dislocation fund and a multi-strategy credit hedge fund.

Morgan Joseph & Co., a full-service investment bank, expanded the firm’s analytics and trading group that operate in the secondary market for fixed-income structured products by hiring two new members to the team, as announced today by Matthew Stedman, the firm's head of sales and trading.