Standard Bank is craving more Latin American action. The South African bank has recently poached Christian Corcino from Moody's Investors Service and Erick Hernandez from Deutsche Bank to beef up its Latin American capital markets group in New York (cont. on p. 25).
Morgan Stanley recently announced key additions to its global capital markets division with the appointments of two new managing directors. Robert Palache was hired to help develop the bank's securitization origination business in Europe. Gary Cottle will become head of corporates in European GCM, responsible for advising corporate and sovereign clients on risk management and finance including corporate debt and derivatives, liability management and transaction management. Both men were previously at Barclays Capital. Palache was head of real estate, corporate securitization and infrastructure finance while Cottle was a managing director and head or corporate risk advisory in Europe, Middle East and Africa.
FGIC Corp., the parent company of Financial Guaranty Insurance Co., announced that it has reorganized its CDO team and will expand the scope of its CDO business. The CDO group has been combined with risk distribution as part of the reorganization efforts. Lynn Finkel, managing director, will run the CDO group in addition to leading the risk distribution function. Eric Hurst was appointed director in late May with the responsibility for international and negotiated CDO transactions. Among other news, FGIC has promoted Elizabeth Menhenett as director within the CDO group, where she will be in charge of the domestic CLO and ABS CDO business.
Anthracite Capital announced last week the recent hiring of Paul Horowitz, as a vice president of BlackRock Financial Management, the firm's external manager. The recent hire will support BlackRock's loan closing and financing efforts, facilitating the increased volume of deals, both domestic and European, as well as the company's expanding CDO financing activity. He is based in BlackRock's New York City office, and reports to Rob Friedberg, a director of BlackRock, and Anthracite's vice president and treasurer. BlackRock also hired Joham Tavera as director. Tavera, who is based in San Francisco, focuses on originating commercial real estate loans in the western part of the country. His responsibilities include originating whole loans, B notes, mezzanine debt and preferred equity. He reports to Dan Sefcik, managing director at BlackRock and Anthracite's chief investment officer.
Freddie Mac announced that Manoj Singh has been appointed senior vice president of market risk oversight. Singh, who was most recently a senior managing director at Bear Stearns, will report to Anurag Saksena, chief enterprise risk officer. In his new role, and as part of the enterprise risk leadership team, Singh will be responsible for overseeing management of market risk across the company. Before his appointment at Bear Stearns, Singh was a senior vice president at Lehman Brothers where he was responsible for risk management of all mortgage products including residential mortgage trading and securitization, whole-loan trading and securitization, ABS and CMBS.
San Francisco-based Seneca Capital has completed the sale of the portfolio of Seneca III, a leveraged CDO that invested in high yield bonds and bank loans with assets of approximately $250 million. According to a recent press release, the fund's debt investors never missed a coupon payment and preferred shareholders will receive an internal rate of return of around $11.6% from inception. Seneca Capital currently has three CDOs under management, and has three more in development that could raise approximately $2 billion.
Barclays Bank PLC has agreed to purchase the U.S. mortgage servicing business of HomEq Servicing Corp. from Wachovia Corp. for $469 million. The payment is based on the company's $209 million of short-term loans to clients, as well as the net book value of the mortgage servicing rights and fixed assets. Buying the unit "will enable us to grow our existing U.S. mortgage securitization franchise," said Grant Kvalheim, co-president of Barclays Capital investment banking division, in a recent statement. "It will improve our ability to price deals, manage risk and expand our list of counterparties." HomEq Servicing's mortgage servicing business manages 300,000 loans for a value of over $43 billion.
Stafford and PLUS loans are likely to increase, says a recent report by Fitch Ratings. The report points to a number of factors as forces driving this prediction, the first of which is H.R. 4939, the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006, that was signed by President George W. Bush on July 15, allowing borrowers who have all of their student loans with one lender to consolidate with any lender. Moreover, on July 1, interest rates on existing variable rate Stafford student loans will increase 1.84% to 7.14% for the coming year. PLUS loans will rise to 7.94%, compared to last year's rate of 6.10%. "Based upon the repeal of the single holder rule, Fitch expects prepayments to increase (for both) loans as borrowers will be afforded more options to consolidate," the rating agency said. The magnitude of the increase, however, will vary depending on the portfolio's characteristics. "Increased rates of prepayment negatively affect a securitization's available excess spread, which is used to assist in reaching parity and providing liquidity," Fitch added.
Babson Capital Management announced that it has closed Avon Ridge CDO, a $130 million synthetic CDO. The Avon Ridge transaction - it's a well diversified portfolio of credit default swaps referencing primarily investment grade corporate debt issuers - was arranged by Societe Generale and buyers include both U.S. and non-U.S. institutional investors. "(We) have expanded into this market in order to leverage our core credit selection and trading capabilities, generating attractive risk-adjusted returns for investors," said Matthew Natcharian, managing director and head of Babson Capital's structured credit team, in a recent press release. "We've seen a lot of interest from global institutional investors who want leveraged exposure to corporate credit risk."
Amid a sea of new structures and asset types, one issuer is marketing what is being called a "plain vanilla" ABS CDO. WestLB is the sole underwriter on a roughly $500 million cash CDO backed by a portfolio of high-grade ABS, primarily mortgage and CDO assets, according to a source close to the deal. The weighted average portfolio rating is expected to be double-A. Structured Finance Advisors will manage the deal. The transaction is roughly 90% ramped; assets for its portfolio had been accumulated since February. "It is a very straight-forward, conservative collateral pool, and a relatively small size," the source said.
Fannie Mae announced last week that it priced its first benchmark REMIC, which was backed by FNMA 6 collateral and featured a 10-year legal final. This series is similar to the Freddie Mac Reference REMIC in that it will have syndicated dealer distribution, a hard final maturity, a minimum $1 billion issue size as well as live Trade Web price quotes. UBS analysts said that it is priced fairly to comparable Freddie Reference REMICs. Settlement is set for Monday, June 26. Bear Stearns, Lehman Brothers and UBS served as the lead underwriters for Benchmark REMIC Trust 2006-B1 AB. The co-managers on the deal were Citigroup Global Markets, Deutsche Bank Securities, Goldman Sachs, Greenwich Capital Markets, Merrill Lynch, Pierce, Fenner & Smith, JPMorgan Securities, and Morgan Stanley.
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