Whispers

March 10, 2003, 12:00 a.m. EST 4 Min Read

People

Annemarie Brostek has left her position as head of global structured product surveillance at financial guaranty insurance provider Radian Asset Assurance Inc. to take a similar position at ACE Financial Solutions, a subsidiary of ACE INA. Brostek will start March 24. In her new position, she will be responsible for all ABS and CDO surveillance at AFS, reporting to Chief Operating Officer David Buzen. She had been at Radian for five years.

Banc of America Securities has moved Michael Johnson over to its asset-backed research strategy team, from his former position as senior high-grade strategist, effective March 3. Johnson, who holds a CFA certification, will cover credit card, student loan and rate-reduction bond sectors of the ABS market. Working with Frank McCollum, Johnson will report to group head, Kumar Neelakantan.

In response to the increased student loan ABS supply seen this year, Fitch Ratings moved Associate Director Adam Kaplan to the student loan group from the new assets group. The team now consists of Director Steve Moffitt, Associate Director Will Nunez, and Analysts Cherry Allen, Christopher Krupa, and Linda Hsu, as well as Director David Hartung, who moved over from the ABCP group late last year. Additionally, Director Andrea Murad will move over to the RMBS group in mid-March. Fitch is looking to add two more analysts to the student loan group in the coming months.

Chris Ricciardi has left his position as CDO head at Credit Suisse First Boston to accept a similar position at Merrill Lynch, reported IFRMarkets. Ricciardi, who has been at CSFB since mid-2000, will report to Merrill managing director Mack Taylor in his new position. Under Ricciardi, CSFB was the leading underwriter of CDO product in 2000, 2001 and 2002. He will be replaced by Tom Pascale, who had been head of portfolio strategy.

UBS Warburg hired Jeff Herlyn and Michael Rosenberg from rival JPMorgan Securities, according to IFRMarkets. The pair will manage outstanding non-ABS-backed cashflow CDOs for UBS.

News

Playboy Enterprises, Inc. plans to sell $110 million in bonds backed by trade receivables generated from sales of magazines, videos and merchandise, according to the New York Post. Proceeds will reportedly go to retire a portion of the publisher's outstanding debt. Banc of America Securities was said to be lead manager for the deal, which has already received a single-B rating from Moody's Investors Service.

The top brass at Brazil's Companhia Vale do Rio Doce (CVRD), the world's largest iron-ore producer, is visiting New York this week and rumors are flying that a new transaction is in the works. Word is that the company is seeking to re-open an outstanding future-flows program. The first was a US$300-million bond sold in October 2000. That transaction was comprised of three tranches: US$25 million of 8.682% notes due 2007, US$150 million of 8.926% notes due 2010, and a US$125 million floater due 2007, which pays one-month Libor plus 65 basis points. More than half the company's income is in dollars and U.S. investors are familiar with the name, so it makes for CVRD to tap greenbacks. Banc of America handled the initial placement off the future-flows program, but its exit from Latin American market precludes its involvement in another potential transaction. Clifford Chance was outside counsel for the originator, while White & Case advised the underwriter. CVRD issued a US$300-million deal last year wrapped with a liquidity facility to mitigate transfer and convertibility risk.

The Bond Market Association (BMA) announced last week that it has begun posting corporate bond secondary prices on its website. The Association, however, does not include prices for outstanding tranches of ABS. The Association also includes prices for Treasury and Municipal bonds on its side, www.investinginbonds.com.

The prepayment reports came in slightly faster than anticipated last Thursday evening. For example, 2001 production FNMA were up to 42 CPR from 38 CPR the previous month. On the other hand, 2001 6.5s were only up 1 CPR, increasing to 58 CPR from 57 CPR. Higher premiums were slightly slower. Analysts thought speeds would be slightly slower because February was a 19-day business month and because of the December slowdown in applications. "What happened is the mortgage bankers were not as backed-up as last fall," said Art Frank, head of mortgage research at Nomura Securities International. This is why some of the early January applications made it through February, making speeds a tad faster. "This is the calm before the storm," said Frank. "We expect a big increase in the 21 business of March and a bigger increase in April given what rates have done in the last week."

Fed Chairman Alan Greenspan stated that he expects a slowdown in cash-out refinancings and this may adversely affect consumer spending going forward. He added that the availability of home-equity to date has lessened economic uncertainty but home prices are not really expected to match the pace in 2002.