ABN Amro ABS syndicate head Neil McPherson left the bank on April 10, according to people familiar with the bank. Market sources said that several people left along with McPherson, and suggested that the change was probably a result of downsizing after the company takeover by Royal Bank of Scotland. Company officials could not be reached by press time. McPherson joined ABN from Credit Suisse, where he was a managing director and syndicate head.
Market sources also said that Salmaan Siddiqui left the trading desk at Credit Suisse. Before joining Credit Suisse in mid 2006, Siddiqui served as a vice president of fixed-income trading for Arlington, Va.-based investment banking firm Friedman, Billings Ramsey. Siddiqui also previously worked at RBC Dain Rauscher and JPMorgan (ASR, 6/10/06).
Cohen & Co. hired Stuart Alper as a managing director in its principal trading group as part of its effort to expand the firm's credit trading platforms. Previously, Alper was a managing director at the Royal Bank of Canada, where he was department head of investment grade/crossover trading and initiated and helped to integrate a CDS trading platform in the U.S. market. Prior to that, he was senior managing director in corporate bond trading at Bear Stearns. Alper will be based in New York.
Greg Reiter, an MBS research analyst at UBS, is leaving the company and is set to take a position at the World Bank, industry sources said. Reiter has worked at UBS since 2005, bolstering what is considered a strong MBS research team. Before joining UBS, he worked for two stints at Freddie Mac as a director. A spokeswoman at the World Bank was unable to confirm whether Reiter is joining the institution or what his function would be.
Assured Guaranty Corp. appointed Michael Babick as managing director of the consumer ABS team. In his new role, Babick will focus on the structuring and securitization of retail auto loans and leases and credit card receivables. Babick will report to Jeff Nabi, senior managing director, consumer and MBS group. Most recently, he oversaw the securitization of credit card and auto-related ABS, including retail auto loans, dealer floor plan loans and rental fleet leases at Ambac Assurance Corp. Before Ambac, Babick was at Financial Guaranty Insurance Corp. and Fitch Ratings.
Citigroup announced last week that it hired Thomas Flexner, who was most recently a Bear Stearns vice chairman, as global head of real estate. At Bear, Flexner headed up the commercial real estate and the financial buyers group. In his new role, Flexner will supervise Citi's commercial real estate operations within Citi Alternative Investments, as well as the investment banking and commercial real estate finance divisions. He will be part of the institutional clients group (ICG) and will report to John Havens, who was recently appointed ICG chief executive. Flexner will also join Citi's management committee. Before his stint at Bear Stearns began in 1993, Flexner was executive vice president and co-head of investment banking at Eastdil Realty. He also worked for AT&T, Booz Allen and Lazard's corporate property business, Cook Flexner.
Former subprime lender Fremont General Corp., which does business primarily via its wholly owned bank subsidiary Fremont Investment & Loan, has entered into a definitive purchase and sale agreement with CapitalSource to sell its retail bank assets worth $5.6 billion. The purchase agreement provides for the purchase of most of Fremont Investment & Loan's bank assets, which include its participation interest in certain previously sold commercial real estate loans, the assumption of all its deposits and the acquisition of all branches by a California industrial bank to be organized and wholly owned by CapitalSource. Meanwhile, Fremont General Corp. announced late last Wednesday that trading in the firm's common stock will be suspended by the New York Stock Exchange before the opening of trading on Thursday.
The International Swaps and Derivatives Association (ISDA) published the latest of its bi-annual surveys of derivatives volumes last week. ISDA saw a notable increase in notional CDS outstanding, which rose by 37% to $62.2 trillion in 2H07 compared with 1H07. ISDA reported that the gross mark-to-market value of these contracts is just 2.2% of the gross notional amount, which falls to 0.5% after the net value is determined. It also excludes any collateral posted between counterparties.
Sidley Austin has advised Discover Financial Services on the sale of its U.K. credit card business to Barclays Bank. The sale, which is valued at GBP35 million ($69.16 million), comprises approximately 1.7 million credit card accounts with roughly GBP2 billion of gross receivables, the Goldfish brand, its operating facilities and staff and certain legal entities. The deal also included the transfer of rights and obligations under existing securitization and conduit financing arrangements. Sidley Austin attorneys said that given the current market environment, they expected to see a number of similar deals and portfolio transfers as further consolidation occurs in the credit card sector. Sidley Austin has previously advised Discover Financial Services in connection with the acquisition of the Goldfish credit card business and the spin-off of Discover Financial Services from Morgan Stanley.
According to market reports, British bank Alliance & Leicester has launched its inaugural structured covered bond program to improve the flexibility of its funding. Alliance & Leicester, Britain's seventh-biggest bank, issued GBP500 million ($984 million) of covered bonds in a placement via HSBC, which it then bought back. The bonds, due April 2009, pay a coupon of 5.4%. Moody's Investors Service has assigned an Aaa' rating to the covered bonds. The cover pool assets are mortgage loans secured by properties located in the U.K. All of the assets are prime loans; a small percentage of about 10% are originated using a fast-track procedure. The loans have a weighted average seasoning of 33 months and a remaining term of 244 months. The weighted average indexed LTV is 57.4%.
Clayton Holdings announced last Monday that it has agreed to be bought by private equity firm Greenfield Partners for roughly $132.6 million. The transaction's value is based on the $6-per-share offer price and Clayton's 22.1 million shares outstanding as of Feb. 29. The acquisition is valued at about $134 million. The transaction also includes the assumption of about $23.8 million in debt. Clayton's board has approved the transaction, and the acquisition is expected to close in the third quarter.
London-based credit asset manager Cairn Financial Products is now the successor collateral manager for White Marlin CDO 2007-1, a $1.2 billion investment-grade corporate CDO. Sailfish Structured Investment Management, which is a wholly owned subsidiary of Sailfish Capital Partners, has resigned as portfolio manager of White Marlin, according to a press release from Cairn. Because of the resignation, Cairn has assumed the rights and responsibilities under the portfolio management agreement effective April 11. "We are delighted to become successor portfolio manager on White Marlin," said David Littlewood, a director at Cairn. "This fits well with our current strategy of assuming replacement manager roles and providing advisory services in credit. We are well positioned to assume more successor management mandates of this type." Cairn has roughly $10 billion of assets under management in ABS, European leveraged loans and investment-grade corporate credit.
The National Association of Home Builders' (NAHB) Housing Market Index for April was unchanged at 20 for the third straight month, just above its record low. NAHB Chief Economist David Seiders believes the U.S. is currently undergoing a mild recession. In addition, he downgraded his outlook for housing starts this year to 30%. In his latest forecast, Seiders expected housing starts to bottom in the third quarter with an overall 27% decline for the year. In other housing news, the March foreclosure report from RealtyTrac also came out last week. The Irvine, Calif.-based firm reported that foreclosures in March increased 5% from February and are up 57% from a year ago. The report showed that one in 538 households received foreclosure filings in March. Nevada, California, Florida and Arizona continued to post the highest foreclosure rates.
Freddie Mac agreed to purchase billions of dollars of new conforming jumbo mortgages with original loan amounts up to $729,750 from Wells Fargo Home Mortgage, Chase, CitiMortgage and Washington Mutual. These mortgages will be used to fund properties in 224 high cost areas that exceed Freddie Mac's $417,000 loan limit, as determined under the Economic Stimulus Act of 2008. By purchasing these loans Freddie Mac will boost originations for larger-jumbo home loans. The agency has said it will buy 15-, 20-, 30- and 40-year fixed-rate, fully amortizing conforming jumbo mortgages; 30-year fixed-rate mortgages with 10-year interest-only periods; fully amortizing 5/1 ARMs and 5/1 ARMs with 10-year interest-only periods. Qualified borrowers can also obtain cash-out refinance conforming jumbo mortgages that provide a maximum cash-out of $100,000, Freddie Mac said. The agency predicted that it could finance between $10 and $15 billion in new jumbo mortgages in 2008.
Ginnie Mae announced that issuance for its MBS program rose to almost $15 billion in March, which is the highest rate of issuance since November 2003. For 1Q08, Ginnie Mae issuance reached $39.1 billion, a rise from $18.3 billion over the same the same period in 2007. "Ginnie Mae has seen a steady increase in our issuance since October of last year," Theodore Foster, senior vice president for MBS at Ginnie Mae, said in a press release. The release acknowledged that in recent years, the GSE and the Federal Housing Authority have lost ground when a part of the mortgage sector started focusing on FHA's traditional core customers including first-time, low- and moderate-income borrowers. Over this period, FHA-insured mortgages dropped from an 11% share of the American home market in 1995, to 3.3% in 2004. Ginnie Mae's share of the MBS market dropped to a low of 4% in 2005. But because of the current volatile mortgage environment, the private label MBS market now represents just 7% of the total MBS market. By contrast, two years ago, private label MBS comprised 57%, Ginnie Mae said.
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