With the hiring of three additional former JPMorgan ABS pros, Royal Bank of Canada has completed plans to beef up its ABCP conduit business. Starting today are Eric Wise as managing director, Charles Schiller and Roger Pelligrini each as vice presidents, all having recently left JPMorgan.
The three new RBC hires will report to recently hired Robert Jones, former JPMorgan and Delaware Funding conduit head, and will be based in New York.
This follows the hiring of John Rhinelander away from JPMorgan, which led to the defections of Jones and up to eight other former JPM/Delaware Funding employees. RBC plans to open a new office, based in Delaware, for its current partially-supported ABCP businesses Old Line Funding Corp. and Thunder Bay Funding Inc.
Deutsche Banc has hired away former Barclays Capital associate director of ABS research Kevin Flaherty to work on its London-based syndicate desk. Flaherty, who resigned last Monday, will not start at his new position for one month, it was added. Flaherty recently penned "MBNA Floating Rate Euro-denominated Issue Offers Value," for the August 2001 Barclays Capital ABS Review and Outlook research piece.
Textron Financial's Finance Company Services has hired Donald Murray as a director in its business development effort. Murray has a background in private-equity, having worked at OffRoad Capital, a PE concern out of San Francisco. FCS is a small-to-middle market lender, formed by Textron in May. The company will make and securitize loans to other finance companies (see ASR 5/14/01).
The director of the Office of Federal Housing Enterprise Oversight has opened the door to changing the treatment of counterparties such as mortgage insurance companies under a final rule that sets risk-based capital standards for Fannie Mae and Freddie Mac. Armando Falcon Jr. told a congressional panel that he is willing to revisit the capital treatment of counterparties, which has given triple-A-rated mortgage insurance companies a potential advantage over their double-A-rated competitors. Falcon said the 10% capital "haircut" between triple-A-rated and double-A-rated counterparties is grounded in historical studies and analysis.
The senior debt rating of Delta Financial Corp. has been lowered to C from CC and placed on Rating Watch Negative by Fitch. The rating actions, affecting $150 million of 9.5% senior secured notes due 2004, followed Delta's announcement that it will not make the Aug. 1 interest payment on the notes. Under the terms of its indenture, Delta has a 30-day grace period to make the payment before triggering a default, Fitch said. Delta has made an exchange offer under which tendering noteholders will waive their right to receive the Aug. 1 interest payment, and the company says the offer, if consummated, will extinguish "substantially all" of the notes.
Andrew Davidson & Co. Inc., New York, has released a new version of its prepayment model for mortgage-backed securities that includes a home price factor. The company said the model is the first commercially available MBS prepayment model to allow users to assess the impact of changing home prices on prepayment rates.
The boards of the Mortgage-Backed Securities Clearing Corp. and two other securities clearing corporations have agreed to become wholly owned subsidiaries of the Depository Trust & Clearing Corp., contingent upon shareholder and regulatory approval. The MBSCC, the Government Securities Clearing Corp., and the Emerging Markets Clearing Corp. are slated to integrate their post-trade processing infrastructure, but would continue operating as separate legal entities under the resolutions approved by their boards.
After studying the ramifications of combining their operations with those of the DTCC, representatives of the corporations' boards said there would be substantial benefits, including improved efficiency and risk management.
PinnFund USA founder Michael A. Fanghella, who has been wanted by U.S. marshals since he failed to make an April court appearance, has surrendered to authorities in San Diego. Subprime lender PinnFund USA, Carlsbad, Calif., was closed earlier this year amid allegations that the firm and its owners engaged in a $100 million-plus fraud scheme in which some of the money wound up in the hands of an adult film star. PinnFund and its owners have been the subject of a federal complaint filed by the SEC, and. Fanghella was one of the defendants. The SEC has alleged that PinnFund, whose chief activity was subprime lending, raised $276 million from investors. The agency accuses the defendants of transferring $107 million to Fanghella and concealing $95 million in losses. The agency identifies pornographic film actress Kelly Cook (aka Kelly Jaye) as Fanghella's girlfriend, saying he gave her $10 million in gifts - including a $5 million home - that ultimately came from PinnFund funds. A warrant was issued for Fanghella in April when he failed to show up in court to answer charges that he violated a temporary restraining order.
Last week Moody's Investors Service downgraded five classes of notes issued by Triumph CDO I, citing continued deterioration in the credit quality of the portfolio and significant par losses in the collateral pool (see ASR 7/23/01).
Heller Financial's first arbitrage $400 million CLO (West Loop) is in a holding pattern as underwriter CIBC World Markets waits on word from GE Capital and Heller whether to proceed, market sources said. A directive was expected to come as soon as last Friday, investors told IFR Asset-Backed Securities, as of press time.