Fortis Investments has created a U.S. ABS team as part of its U.S. fixed-income and structured credit unit and plans to offer two CDOs before the end of the year, company sources said.
Will Braman, U.S. CEO of Fortis, said both of the deals will be fully funded structured finance CDOs and will be brought to market by separate investment banks. One of the deals will be a roughly $700 million offering backed by single-A or higher rated securities, with the other possibly totaling $400 million backed by triple-B rated collateral.
Braman said the deals would be announced within the next few weeks. Braman added that these CDOs would be primarily made up of RMBS, and Fortis' future deals would be mostly RMBS and CMBS because those make up the largest proportion of the ABS marketplace. Braman declined to comment on the specific terms of the deals.
Fortis already has a $7 billion ABS CDO business in Europe, and Braman said the firm's business plan for this side of the pond is to reach $5 billion under management within three years. Braman noted that the plan is aggressive, but that it took merely two years for the European arm to get to $7 billion. "Fortis Investments wants to make itself a significant presence in the asset management business in North America, and in fixed income it will be structured financial products that will be our focus," said Braman. "Given our experience in Europe we felt this would be the fastest way to build assets, build revenues and get to profits," he added.
Last week Fortis announced it added six members to its U.S. fixed-income team to focus on ABS. Karim Berichi, formerly head of the asset securitization group for Banca Intesa in New York, was brought on as ABS portfolio manager, and John Palphreyman, formerly a trader with TIAA Investments, to trade ABS. Fortis has also hired Terry Campbell, formerly head of the structured finance underwriting group for ACE Guaranty Corp., as its credit head, Frank Deutschman, formerly chief technology officer for Trepp, as its systems engineer, and Patrick Fontana, formerly with E*Trade, as its RMBS security analyst. Rounding out the new squad is Vladimir Kostour, who joins as collateralized debt obligation quantitative analyst from the structured finance group at Jeffries & Co. In addition to these, Braman said Fortis has an offer out to a CMBS analyst and plans to hire one commercial and one consumer asset-backed analyst in the second quarter of next year for the New York ABS office. The firm will also hire five corporate credit analysts, a CLO portfolio manager and a credit portfolio manager for its corporate credit operations in Boston.
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