John Woodhall joins the London office of Sidley Austin Brown & Wood as a partner in the International Finance Group. Woodhall joins the firm from Clifford Chance, where he was head of the international securitization group. In his new position, Woodhall will continue to maintain a focus on European-based securitizations and structured finance, including commercial and residential mortgage-backed transactions, consumer and trade-receivable transactions, conduit deals and true-sale and synthetic CLOs and CDOs.
Analysts at the Royal Bank of Scotland said that the third transaction under the Italian government-related real estate securitization series, SCIP, might be delayed until next year. Sources at the bank stated that the decision is likely based on the performance of the latest deal, SCIP 2, which priced at the end of last year. The transaction has fallen behind its expected collection schedule and could expose investors to extension risk, particularly at the class A1 level where the notes are due in April 2004.
According to a number or articles in the press last week, European investors are calling for reforms on the standard of protection in the European corporate bond markets that would bring standards more in line with equity investment standards. One area in particular that has caused distress is event risk. Bond investors are looking for covenants for corporate grade issuers that would essentially allow the bondholder better liquidity in the event of a change in the ranking of debt.
Deutsche Bank Securities announced last week the hiring of John O’Connor as director and senior 15-year mortgage passthrough trader. O’Connor, who is based in New York, will report to Trip Mestanas, managing director and head of mortgage passthrough trading. O’Connor joins DBSI from Merrill Lynch, where since 1996 he helped build the bank’s flow-oriented passthrough trading business. He has traded middle-market/retail, seasoned conventional, 15- year and mortgage passthroughs.
UK's largest debt originator HBOS has restructured its capital markets division, hiring Robert Plehn and Parker Russell from the Dutch financial services group ING. Plehn, who was former global head of securitization at ING, is now head of securitization at HBOS. His group will be part of the new capital markets team to be headed by Tony Main, currently head of funding and liquidity at HBOS. Ian Fox, currently head of money markets, will replace Main. Russell, who was head of ABCP at ING, will be head of debt capital markets at HBOS. He will report to Plehn. Included in Plehn's team will be David Balai, who is head of capital markets and securitization at HBOS Treasury services. Published reports also stated that ING has looked internally to replace Plehn. Enda Allen, previously global head of structured credit risk management at the bank, has been promoted as global head of securitizations, effective immediately. Allen, who is based in Dublin, has been with ING since 1993.
ABN AMRO added a new dimension to its wholesale clients corporate and investment banking unit last week. The bank announced that it plans to launch a range of new products and services focused on value-added trade ideas and advanced quantitative tools. According to sources at the bank, the new products will veer away from vanilla research and will provide investors with credit research and strategies focused on original and timely trade ideas.
Moody's Investors Service last week launched
Fitch Ratingslast week revised the Rating Watch on Fairbanks Capital Corp's residential primary servicer ratings to Negative from Evolving for its 'RPS3-' sub prime and home equity loans, 'RPS3' servicer rating for Alt-A and its 'RSS3' special servicer rating. Fitch is concerned about the procedural changes Fairbanks recently implemented to streamline the process of reconciling broker price opinion (BPO) values. The reconciled value of the properties is utilized in Fairbanks' net present value model.
Freddie Macsaid mortgage rates should average between 6.0% and 6.25% between now and year-end 2004. The GSE also stated that the refinance share has dropped to half of new loan applications and should go down to one-third of lending in 2004. Thus single-family originations will likely drop about 40%, to $1.9 trillion next year from $3.3 trillion in 2003. Freddie expects the ARM share of new lending to increase by roughly a quarter of conventional originations next year from the 13% level seen early summer. Home values will still appreciate, though at a slower pace compared to the past few years. The average home is forecast to grow about 5% in value next year.
The House of Representatives last week approved the FHA Multifamily Loan Limit Adjustment Act of 2003, allowing the Department of Housing and Urban Development to raise Federal Housing Administration mortgage limits for multifamily buildings in high-cost areas, said The Bond Buyer. Supporters stated the legislation is important for markets where construction costs are extremely high, rendering current loan limits insufficient. This could probably help increase the supply of affordable rental housing and spur the issuance of multifamily housing bonds.
Standard & Poor's last Wednesday lowered its counterparty credit ratings outlook on The Federal Home Loan Banks of Atlanta and Pittsburgh to negative from stable after both banks reported third-quarter losses. The losses were attributed to historically low interest rates resulting in lower interest income and market values on their derivatives. These FHLBs have S&P's "AAA" and "A-1+" counterparty credit ratings. This outlook downgrade came less than two weeks after the rating agency cut the long-term counterparty ratings of FHLB-New York to "AA+" from "AAA," which occurred after FHLB-New York announced a $183 million loss on a $1 billion sale of ABS backed by MH loans.
Correction:
In a story published in ASR’s 10/06/03 issue entitled “Lackluster Bank Demand Only Temporary, Analysts Say,” the source of a report cited was incorrectly attributed. Morgan Stanley released the recent report on bank demand, not Lehman Brothers.
