People

Mirja Wenski, deputy head of structuring and investment at Bankgesellschaft Berlin, will join ZAIS Group this month to work as a portfolio manager in Dublin. Wenski will report to John O'Grady Walshe, the former head of BGB's structured finance investment group. ZAIS Group, LLC was founded in July 1997 and in 1999 the firm became known as the innovator of the first CDO backed by CDOs, with its ZING I series. The N.J.-based firm currently manages more than $2 billion in assets across six funds.

Wachovia Securities has let go of several members of a fund group that invested in sub bonds. Seniors in the group were Reggie Imamura, Matta Hapgood, Steve Geis and Paul Zajac.

Said a representative for the bank, "Some people were displaced in asset securitization this month as the company refines its strategic focus following the merger with Wachovia and First Union."

According to IFR Markets, last week Standard New York Inc., part of Standard Bank London Limited, hired Jay Tom as senior vice president for syndications and structured finance. Tom's main task is to grow the firm's syndications and structured finance business in Central and Latin America.

News

In the wake of balance-sheet scrutiny, several headline companies, including Tyco and Qwest, announced last week that they would be using either securitization or the sales of securities linked to assets as a possible method of extinguishing debt.

Arizona ABS-conference attendees who flew via United Airlines had the opportunity to enjoy a music channel on their flights featuring Pullman-bond legendary songwriters whose catalogs have been securitized by the company. Ironically, the royalties paid by United Airlines for use of the songs flow into the Pullman bonds themselves, a source at the conference said.

Rating

Moody's Investors Service placed all three classes of the static CDO Cathedral Ltd. on review for downgrade. Approximately $373 million of the notes will be affected. This action follows deterioration in the credit quality of the underlying collateral following the filing for bankruptcy protection of Global Crossing Ltd., parent company of one of the credits in the portfolio. This is the second credit event in the portfolio and the action follows prior negative action taken on all three notes before.

Fitch Ratings has downgraded the Class B and C notes of Leonardo Synthetic Plc and has simultaneously affirmed the Class A notes. The action follows deterioration in the underlying pool of aircraft loans and obligations as a result of both the weakening credit quality of the airlines and the softening base values of aircraft included in the portfolio. The Class B notes were downgraded to AA- and the class C Notes were downgraded to A-.

Last week Moody's Investors Service downgraded the Class C notes of Citibank's synthetic CLO, C*Star 1999-1 to B1 from Ba2. In line with recent downgrades the action comes as a result of overall weakening in the credit quality of the underlying pool. Last month both Fitch Ratings and Standard & Poor's took similar action to the same tranche.

Following Mexico's sovereign upgrade to investment grade, Standard and Poor's also upgraded Banco Nacional de Mexico (Banamex) and BBVA Bancomer SA to BBB-.'

Fitch Ratings has downgraded PDVSA Finance Limited to BBB' from A-.' The rating action comes on the heels of Fitch's downgrade of The Bolivarian Republic of Venezuela to B+' from BB-.' The rating agency also noted that the downgrade reflects growing concerns related to the government's increasing willingness to access PDVSA's assets during times of financial distress.

CDOs

Goldman Sachs appears to have made good on its mid-January threat to bring the $400 million Ballyrock CLO from Fidelity as tight as +42bp/3ML (A/L 7.5y), according to IFR Markets. However, the talk on the single-A 9.4-year A/L piece was knocked back to a respectable +150bp/3ML, from talk of +135bp/3ML. The +150bp level matches the most recent and comparable CLO, Stanfield's Quattro via CSFB, which priced single-As (A/L 10.6-year).

Despite issuer Highland Capital Management having the AAAs of its PAMCO III CLO put on rating watch negative by Standard & Poor's two weeks ago, CIBC World Markets was able to price a $504 million leveraged loan/partially-backed CDO, Restoration Funding, at decent levels for the asset class. The senior notes priced at +55bp/3ML @100 (A/L 9y), +5bp wide from talk of +50bp, and a similar level to where structured finance CDOs are pricing.

Citigroup/Salomon Smith Barney is expected to launch the equity on MM Community Funding III, a $500 million to $700 million area trust preferred-backed CDO in mid-February. Last November, SSB and Sandler O'Neill, as a joint-lead, priced the MM Community Funding II CDO at +100bp/6ML (WAL 12.8y). These deals are backed by new issue trust-preferred securities from approximately 50 regional banks. (IFR Markets)

Corrections

In the story "Stanfield/Ceres readies SIV" (ASR 1/21/02), XL Capital Assurance did not, in fact, take an equity stake in Stanfield. However, XL Capital did.

In last week's issuer profile of First Republic Bank, the firm's non-performing assets comprised 0.04% of total assets, not 4% as originally reported.

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