Calyon last week announced plans to grow its global CDO staff by one-third. The news came amid a shake-up that left the investment bank without several key members of its U.S. CDO team, including cash CDO head Alexander Rekeda.
Nonetheless, the global investment bank is aiming to generate enough U.S. CDO volume and revenue to land among the top five CDO underwriters in the country, a move that would bring it closer in line with its European CDO market standings, said Loic Fery, a managing director and global head of credit markets and CDOs at Calyon, a unit of France's Credit Agricole.
Calyon intends to station roughly half of its new hires, projected at about 60 employees, in the U.S., Fery said. Certain senior level hires may be announced as early as this week, he said. Calyon had temporarily relocated a handful of employees to its New York office after losing what appear to be roughly a dozen members of its CDO and debt capital markets teams to Mizuho Securities USA, a subsidiary of Japanese bank Mizuho Financial Group Inc. (see article page 11).
While competition is fierce in the European CDO market, Calyon, among others, is aiming to solidify a spot in what some view as a more malleable U.S. CDO market. For Calyon and others, a big motivator is the prospect of real money accounts - such as insurance companies and pension funds - beginning to invest in CDO securities. Calyon added 55 people to its structured finance group in 2006.
"We have the ambition to further move up in terms of presence in the U.S. CDO space," Fery said. Calyon this year tripled its global CDO issuance volume from 2005. The firm is expecting to issue about $10 billion in U.S. structured finance CDO volume by yearend. Calyon plans to grow that number next year, Fery said. While the investment bank ranks among the top European CLO arrangers, it has yet to make a foray into the U.S. CLO sector. The sector will be one of the investment bank's U.S. focuses, along with ABS CDOs and synthetics, such as managed deals and correlation products.
Calyon earlier this year launched the first multi-manager cash CDO transaction and first CLO offering monthly liquidity through redemption, Confluent Senior Loan Opportunities PLC. The deal was sub-managed by Ares Management LLC, AXA Investment Managers, Intermediate Capital Managers, Loomis-Sayles & Company and Morgan Stanley Investment Management.
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