Merrill Lynch has hired veteran ABS banker Bill Heskett as a managing director in its non-real estate ABS group, reporting to Managing Director Ted Breck. Heskett moved over from the Chicago office of Banc of America Securities, where he focused on auto ABS for more than 10 years. In his new position, he will focus on a wide array of consumer assets.
Banc of America Securities will be moving its ABS trading operations to the bank's West 57th street office in Manhattan this month. Moving to New York will be Global Head of Securities Trading Chris Hentemann, Rob Karr and Pat Beranek. Charlene Balfour will move over from BofA's sales effort to work on the New York syndicate desk. Mortgage-backed, CMBS and CDO trading will operate out of both the New York and Charlotte offices. ABS origination and banking will remain in Charlotte.
Hedge fund Highland Financial Holdings Group has hired Dean T. Smith as a senior vice president in its credit risk products management group in New York. Smith previously was at Stonehenge Financial Partners, a boutique investment bank, which he founded in 1996. Smith is also the former co-head of structured finance at Nomura Securities. Smith will report to Paul Ullman, Highland's chief executive and chief investment officer.
Barclays Capital has hired Citigroup Global Markets MBS passthrough traders Tom Hamilton, Levent Kahraman and Scott Wede as managing directors. Barclays also hired researcher Christopher Flammia from Citi's mortgage research group, and trader David Finkelstein as directors. Additional hires by Barclays are expected for the near term.
Citigroup Global Markets last week purchased the servicing rights for oil conglomerate Sunoco Inc.'s private label and commercial credit card operations for $94 million. In addition, the two companies signed a multi-year agreement for the operation and servicing of the Sunoco private label credit card program. The transaction will be completed by October 2004.
Norddeutsche Landesbank continues the expansion of its asset-backed CP business, with last week's management board approval for an additional $1 billion in liquidity for Hannover Funding, the firm's conduit. This brings Hannover's potential liquidity support from NORD/LB and other banks to about $4.5 billion. The bank is now also looking for both a credit and a securitization analyst to join Kerry Eschwie, who recently came over from Moody's Investors Service as senior credit analyst.
A Merrill Lynch report said post-Parmalat Italian issuance has fallen to 11% of total European non-CDO issuance from 22% for the same period in 2003. Italian issuance has dropped to 10 billion from 14 billion over the 2003 to 2004 period. Analysts said that the "increasingly difficult" legal environment is putting off both sellside and buyside players.
Following the Parmalat fiasco, a new Italian banking law gives the Bank of Italy the power to approve or deny every offer of foreign securities, including offshore SPVs with Italian assets. But over the past year, the Bank of Italy is increasingly taking its time in what otherwise was a short approval process, said analysts. The law was not intended to protect investors but rather to protect capital market interest and preserve the liquidity and structure of the market. A law designed specifically to protect investors is currently in the works and is expected to transfer any protection for investors to a new authority. Until a more specific law is passed, investors must wait out the lengthy authorization time for non-vanilla issuance that is currently creating a lull in Italian securitizations.
The U.K. Court of Appeal has ruled in favor of a pub licensee contesting unfair beer prices as outlined in the lease terms tied to Inntrepreneur Pub Company (see ASR 5/24/04). The tied leases require the pub licensee to purchase beer at above market prices in exchange for a discount on rent. The court's ruling found that this tie breached EU competition laws, and it has awarded damages to the pub licensee, in this case Bernard Crehan. This has triggered fears that other beer tie arrangements in the industry may be endangered, and that consequently beer prices may have to drop sharply. But a Deutsche Bank report on the situation said that such ties were inherent in older tied leases; it no longer exists in modern tied leases. Moreover, Fitch Ratings stated last week that it did not expect any of the securitized pub companies to be adversely affected by the decision.
Gross fixed-rate agency MBS supply was just below $85 billion in May, estimates JPMorgan Securities. The bank predicts fixed-rate agency paydowns at $90 billion and thus expects negative issuance growth for the fourth consecutive month.
Copyright 2004 Thomson Media Inc. All Rights Reserved.