People
Peter DiMartino was hired as a managing director in the Greenwich Capital Markets research department, where he will head the ABS strategy and research effort. He reports jointly to Doug Greening, head of agency MBS trading and Ron Weiybe, head of ABS trading. Prior to joining Greenwich, DiMartino had been director of asset-backed and mortgage credit research at Salomon Smith Barney, where he had worked for 14 years.
UBS Warburg, looking to build up its CDO business in 2003, is reportedly looking to hire new senior bankers, according to IFR Markets. Sal Naro, who is also currently head of global single-name credit default swaps, will now be responsible for all cash and synthetic CDOs backed by corporate credits. Meanwhile, Gina Hubbell, the senior structuring banker for non-synthetic corporate credit-backed CDOs, has moved to an undisclosed new role within the bank. James Stehli will continue to head up ABS CDOs. while JJ McKoan, who heads the CDO syndicate among other products, is now taking a senior role in fixed-income origination.
Miscellaneous
Bankrupt Union Acceptance Corp. disclosed last week that surety provider MBIA has signed off on a plan to allow JPMorgan unit Systems & Services Technologies Inc. (SST) to replace UAC as servicer on its 18 outstanding auto loan securitizations. In its most recent 8-K filing, UAC stated that it "has agreed in principle" to a reorganization plan and that MBIA "has indicated that [SST] would be acceptable to it as a successor servicer." Under the proposal, SST would purchase the servicing platform assets and hire most servicing employees. UAC would retain its residual interest in its securitized assets. The purchase price for the platform assets remains subject to negotiation, the filing also stated.
Standard & Poor's last week placed the ratings on Metris Cos. Inc. on credit watch with negative implications. The rating action included the firm's B' long-term counterparty credit and senior unsecured debt ratings and its CCC+' subordinated debt rating. The rating agency's action comes in the wake of the credit card's company's statement that it is reporting a loss of $48.5 million for fourth-quarter 2002. Citing the fact that this loss and charge-offs have continued to run at elevated levels, S&P is concerned that funding for the company may become more limited. As it is, Metris' funding alternatives are under pressure as management continues to shrink deposits in its bank subsidiary and the ratings of many of its asset-backed have been downgraded.
Bank of America, the fifth-largest seller of loans to Freddie Mac, has ended its exclusive strategic alliance with the GSE and sell some collateral to rival Fannie Mae. BofA's decision is reportedly just the latest example of a trend toward the fraying of such alliances. For instance, Countrywide Home Loans, which had a similar agreement with Fannie is now actively selling some of its production to Freddie. MBS analysts said that BofA's decision was probably a function of bad execution on Freddie passthroughs. Right now, Golds are trading even-dollar to slightly behind Fannies. The intrinsic value of the delay difference (10 days) is probably 5 over to 6 ticks. "So no one who's locked into selling to Freddie can be happy," said an MBS strategist.
Last week the Trading Practices Committee of the Bond Market Association (BMA) voted to allow the recently restructured GNMA II MBS to be "good delivery" into TBA trades. The BMA's release said "this action should support the liquidity of the GNMA II market and create additional opportunities for mortgage lenders who depend on Ginnie Mae securitization for FHA, VA and other government loans." Art Frank, head of mortgage research at Nomura Securities, said that for settlement in July 2003 and later months, the old, higher WAC GNMA IIs will be cheapest-to-deliver TBA. Meanwhile, the new, lower WAC GNMA IIs will trade at a premium to the TBA price. He added that as the old pools pay down and eventually become less liquid, the TBA GNMA II market will likely track the new, lower WAC pools. Once that happens - which will likely not occur until 2005 or even 2006, depending upon interest rates - GNMA IIs should trade close to GNMA I prices, and issuance should move away from GNMA Is to GNMA IIs.
Sales of new single-family homes rose 3.5% in December as 2002 turned out to be another record year for the homebuilding industry, beating last year's record by 7.5%. New homes totaled 976,000 for all of 2002, compared with 908,000 in 2001, said the U.S. Commerce Department. The department also reported that new-home sales rose from a seasonally adjusted annual rate of 1.045 million in November to 1.082 million in December, which is the fifth consecutive month in which sales have exceeded the 1 million rate. The National Association of Home Builders is forecasting that sales of newly constructed homes will slow to 942,000 this year, even though sales ended the year at a record pace and inventories of unsold new homes are lean.
