Mark Nicolaides started at Latham & Watkins last Monday after ending a 20-year career at Mayer Brown Rowe & Maw last May. Nicolades joins the firm as a partner in the finance department, and is expected to boost the firm's presence in the European securitization market. Nicolaides specializes in structured finance and in representing financial institutions and companies, with specific expertise in structuring and documenting conduits and structured investment vehicles, CDOs and ABS backed by a wide variety of assets, including European multicountry trade and auto loan and lease receivables. He is seen as an expert in Basel II, specifically regarding regulatory capital requirements for banks. "Mark adds formidable securitization expertise to our London office," said James Chesterman, chair of the firm's London finance department.
Cadwalader, Wickersham & Taft announced last week that it named Leon Pacini, a capital markets lawyer in its London office, as special counsel to the firm. Pacini concentrates on asset-backed and mortgage-backed securitization transactions, representing managers, arrangers, servicers, special servicers and institutional investors throughout Europe and the U.S., as well as on international securities offerings. He has also represented sovereign issuers on public bond offerings.
Seven lawyers have been elected to the partnership of Fried, Frank, Harris, Shriver & Jacobson LLP, the firm announced last week. As of Sept. 1, the new partners are Michael Alter, Craig Arnott, Tommy Beaudreau, Brian Kniesly, Brian Mangino, Rob McBride and David Shaw. Specific to the asset securitization market is McBride, an attorney in the firm's London corporate department, who focuses his practice on a wide range of financing transactions, including international debt offerings, project financings, derivatives, securitizations and other structured finance transactions. Kniesly, an attorney in the New York tax department, focuses his practice on taxation issues of hedge funds, real estate transactions, REITS, private equity funds and partnerships. McBride joined the firm in 2005; Kniesly has been with the firm since 2001.
Scottish Re Group appointed of Nathan Gemmiti as general counsel. Gemmiti joined the firm in 2003 as the chief legal counsel for Scottish Re's North American operations. Earlier this year, he was appointed to senior vice president, associate counsel for Scottish Re Group. Prior to working for Scottish Re, Gemmiti served as in-house corporate counsel for Forum Financial Group, which has since been renamed Citigroup Global Transaction Services.
Stephen Blumenthal, deputy director of Office of Federal Housing Enterprise Oversight, announced that he would be leaving to return to the private sector in the fall. Blumenthal has spent four years with the agency, after joining in July 2002 as counsel to director Armando Falcon. Blumenthal was also head of the special examination of Freddie Mac and later, he as deputy director and acting director, oversaw the special examination of Fannie Mae. "The confirmation of Jim Lockhart as the OFHEO's director makes it possible for me to leave knowing that the agency is well led and will continue to accomplish its important mission," Blumenthal said. "Working at the OFHEO during these challenging times has been an invaluable experience and I am privileged to be a part of it. Now it is time fort me to move on to new challenges." A search to fill the position of deputy director will begin shortly, according to a recent release.
New Century Financial announced last week that Patti Dodge, chief financial officer, is transitioning into a new role that will focus on investor communications. She will remain the firm's CFO until a replacement is found, the company stated. According to press reports, the change in duties comes as a big surprise since Dodge is considered by Wall Street analysts as one of the pillars in the firm's management. In related news, New Century increased its second-quarter profit 11% to $105.5 million compared to a year ago. This growth is attributed to the mortgage company benefiting from a more receptive investor market for its loans. To illustrate, boosting profits was mainly a 76% increase in the company's gain from the sale of loans to $195 million versus a year ago. New Century's profit margin on loan sales increased to 2.1% from 1.67% in 1Q06, which was a more difficult market for loan sales. The company made $16.2 billion in loans, which is a 20% jump from year ago levels.
Freddie Mac announced that beginning in August of this year, settlements in its REMIC program, Initial Interest (SM) fixed-rate Gold Participation Certificate (PC) securities with the prefixed of H0 (10/20), H1 (15/15) and H2 (10/10) will be eligible to be used as assets to back REMIC securities. The company will also permit Initial Interest fixed-rate Gold PC securities and regularly amortizing fixed-rate Gold PC securities with the same coupon and term to be included within the same REMIC group, a recent release from the GSE said.
The Bond Market Association and the International Swaps and Derivatives Association highlighted the importance of issuing standards that improve the usefulness of financial reports based on the needs of the report users and the need to balance costs and benefits of new standards. These were stated in a comment letter filed with the Government Accounting Standards Board last week. The letter lays out BMA's view that, when accounting for derivatives, a disclosure model is a more appropriate one given the unique aspect of government entities.It also provides comments from both associations about implementing fair value reporting of derivatives, including measure of hedge effectiveness, termination and change of intent, accounting for hybrid instruments, written opinions in a synthetic refunding and transition requirements.
Morgan Stanley Investment Management launched a fund on July 31 - the Morgan Stanley Institutional Fund Trust (MSIFT) Long Duration Fixed Income Portfolio - that will invest primarily in a mix of dollar-denominated, investment-grade, fixed income issues, particularly U.S. government, corporate, and MBS. According to the Morgan Stanley unit, the primary objective of the fund is to offer pension plans, endowments and foundations the opportunity to match the duration of their plan assets more closely with their liabilities. As of May 31, the unit had $440 billion of assets under management and supervision.
According to Freddie Mac's quarterly finance review, 88% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least five percent higher than the original mortgage balances in the second quarter of 2006. This percentage is up from the first quarter of 2006, when the share of refinanced loans that took cash out was a revised 86%, and is also the highest since the third quarter of 1990. The share of all mortgages applications that were for refinance did slip, however, for the second consecutive quarter to 42% from 44% in 1Q06, according to Freddie Mac's Primary Mortgage Market Survey. Additionally, the Cash-Out Refinance Report revealed that properties refinanced in the second quarter experienced a median house-price appreciation of 33% during the time since the original loan was made, up 3% in 1Q06. The median age of the original loan was 3.2 years, about two months older than the median age of loans refinanced during 1Q06.
The July prepayment reports were released last Friday evening for conventionals and Aug 7 for GNMAs. July prepayment speeds were predicted to slow 12% to 13% from June, primarily as the day count falls to 20 days from 22 days. Paydowns are estimated in the $35 billion area, down from $40 billion in June. Speeds are expected to recover about 8% to 10% in August as the number of collection days jumps to 23 from 20, then decline around 15% on slowing seasonals and a lower day count the following month.
Wachovia Bank is marketing a hybrid CDO backed by cash and synthetic CMBS to be managed by Blackrock Financial Management. The $500 million Kimberlite CDO I is expected to come with a $333 million unfunded super-senior tranche and issue about $166.5 million of funded senior and subordinate notes. The portfolio consists 90% of synthetic CMBS, with a 10% cash bucket. The deal has a 10-year weighted average life.
On the emerging markets front, the buzz was that Russia's second public RMBS, originated by CityMortgage, priced last week. A $64.3 million A piece garnered a spread of 160 basis points over Libor, according to a market source. With a legal final of 2033, that piece was rated Baa2' by Moody's Investors Service. Lead arrangers were Greenwich Financial Services and MNB Capital Markets.
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