Goldman Sachs is losing two of its top securitization executives - Joe Marconi, the co-head of the ABS finance group, and Eric Bothwell, the co-head of the CDO/CLO group. Market sources said it appears that Goldman will not hand those titles to anyone else. Their two fellow co-heads remain - Curtis Probst for ABS and Peter Ostrem for CDOs and CLOs. It appears both will become group heads instead of sharing the leadership role with others. However, the securitization team is reportedly growing, and Goldman is believed to be in the market for additional hires. It was unclear at press time where Marconi and Bothwell might be headed.
Mortgage real estate investment trust Aames Investment Corp.'s President and COO John Vella has resigned. Michael Matthews and James Fullen will assume Vella's responsibilities. Matthews, currently executive vice president of national retail sales and marketing, has been promoted to chief production officer and will be responsible for all sales and marketing efforts for the retail and wholesale channels. Fullen, currently senior vice president and head of retail operations and settlement services, has been promoted to executive vice president - chief operations officer for retail and wholesale, with responsibility for the operational processes of the retail and wholesale channels.
Real estate investment trust New Century Financial Corp. promoted Joseph F. Eckroth from senior vice president and chief information officer to executive vice president of the firm as well as COO of New Century Mortgage Corp.
Societe Generale Corporate and Investment Banking appointed Thomas Castaignede as a consultant to its debt finance division. Castaignede joins the Societe Generale Group, following other professional rugby players such as Nick Farr-Jones in Australia as well as Yannick Jauzion, Jerome Cazalbou and Sylvain Marconnet in France. Castaignede will start his career at the firm by familiarizing himself with the fixed-income banking environment, particularly in sales. He will also spend time with the research, trading, syndicate and origination desks in the fixed income department. The new hire, who will be based in London, will report to Raphael Geys, head of fixed income and derivatives sales for financial institutions in Europe. He joined the bank in December and will work part time initially to allow for his activities as an international professional rugby player. Castaignede is an engineer with a degree in industrial processes engineering from Institut National des Sciences Appliquees.
When determining how much risk might be involved in a structured finance investment decision, the rating agencies should not be the last word for investors, according to Dennis Kraft, head of consumer ABS research at Wachovia Corp. While speaking at the "Securitization 201 - A Primer on Risk and Value" session during the American Securitization Forum's ASF 2006 conference in Las Vegas last week, Kraft said not all risks are addressed by the agencies when they assign a rating. "It is important to know if I buy a rating, it is telling me the risk of some things, but not other things," Kraft said. He said such securitization features as interest rate risk, cash flow risk, structural risk, credit risk, originator and servicer risk, liquidity risk and event risk are not always entirely covered by the agencies. "I will say that most of these risks are not addressed by the rating agency," Kraft said.
The government-sponsored German banking group KfW plans to start buying securitization transactions based on underlying SME loans. A spokesman with the banking group said last week that it will establish a new ABS SME program with an estimated volume of 2 billion ($2.4 billion) this year. "Banks that are able to efficiently pass on their risks from SME businesses to investors in the capital market tend to be more willing to extend new loans to SMEs," the spokesman said. "In the future, KfW [Bank Group] will be available as a reliable "anchor investor" and, thus, will help to further expand and strengthen the securitization market in Germany."
Moody's Investors Service's U.K. credit card indices continued to deteriorate during November 2005, as measured in terms of delinquencies, charge-offs and the payment rate. However, performance has been variable across trusts. Moody's report, "U.K. Credit Card Indices: November 2005," said that though the negative effects have been limited by a strong labor market, historically low interest rates and a steady supply of consumer credit, an increase in interest rates along with a dramatic drop in home prices or an increase in unemployment could pressure U.K. credit cardholders into paying more of their debt on time. Also, increased pressure on the U.K. consumer could spark a further deterioration in credit card performance. However, aggregate excess spread in November remained broadly in line with the level observed a year ago. It appears that, despite the downturn in delinquencies, charge-offs and the payment rate, credit card issuers have been able to effectively manage their origination and servicing strategies so that excess spread has remained relatively unaffected.
Fannie Mae increased its retained portfolio by $11.6 billion in December, the equivalent of a compounded 21.4% annualized rate. The GSE's MBS accounted for $4 billion of the growth. This represented the first month of growth since October 2004. RBS Greenwich Capital analysts said this shows Fannie's ability to grow its portfolio size now that its regulatory capital surplus is in place. The GSE's retained portfolio ended 2005 at $727 billion, which is 19.6% less than the 2004 total. Fannie's portfolio fell $177 billion last year, leaving it only $17 billion above Freddie Mac's retained portfolio. The portfolio drop was primarily due to a dip in FNMA MBS holdings, which declined by $151 billion last year.
The British Beer and Pub Association is petitioning for a total smoking ban in British pubs (see ASR, 1/16/06). While several pubs have tried to get a partial ban passed - the ban would not apply to pubs not offering food - the recent push in Parliament has been to pass an all-out prohibition that only excludes private member's clubs. The association argued that an exemption of these private member's clubs would damage the pub trade. At a recent teleconference, Paul Crawford, a Fitch Ratings analyst, said it's a wait-and-see situation regarding how the legislation pans out. However, looking at transactions with exposure to Scottish pub companies will, undoubtedly, be used as a learning experience to get up to date on how the ban might affect transactions with exposure to English pubs, Crawford said.
Standard & Poor's has introduced an enhanced version of RatingsDirect, its real-time online credit ratings and research solution. RatingsDirect was enhanced to better serve credit/research analysts, credit risk managers and portfolio managers. It offers expanded credit research and ratings coverage, including National Scale Ratings, Municipal Issuer Credit Ratings and Financial Enhancement Ratings on a new platform that allows users to review an issuer's current ratings, ratings history and related research at a glance. Users can create up to five unique alerts profiles and focus them specifically by industry, sector, country, region or state.
Northern Rock said it plans to issue at least one additional securitization of its retained first loss piece, similar to its Whinestone deal that debuted last year. Market reports indicated that the deal should come by the third quarter.
Moody's de Mexico has rated Mexico's Consorcio Ara 'A2.mx' on the national scale and 'Ba2' on the local currency, global scale. Ara develops, builds, markets and sells housing to middle-income homeowners. The company runs a profitable business and enjoys "sound liquidity," according to a Moody's report. Operating margins have also been generous, thanks to an ample land bank, cost controls and other factors. On the downside are the company's close ties to Mexico's economic and political environment and the steep costs of land development. The agency pointed out that the little debt that Ara carries is entirely short-term. The homebuilding business in Mexico is no stranger to securitization, with Ara peers Casas Beta and Sare Holding having tapped the market with ABS deals. No word yet on whether Ara is looking to follow suit.
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