Investment bank Friedman Billings Ramsey says it will exit the mortgage-backed securities (MBS) underwriting business, after years as an also-ran for home equity loan securitization deals. "We are exiting the mortgage ABS underwriting business," said company spokeswoman Lauren Burk. "Mortgage trading had been a non-material, non-core part of our business." Some employees in FBR's mortgage ABS business will be reassigned to other areas of the bank, said Burk, but she did not specify exactly how many professionals would be impacted by the reorganization. The unit will close by the end of October, said sources familiar with the situation. FBR has acted as lead manager on at least 20 deals amounting to at least $13 billion in real estate ABS mandates, according to Asset Securitization Report's database. The Poplar ABS Mortgage
Pass-Through transaction, which priced in March, was one of its more recent transactions.
UBS Securities Japan announced last week that it has started a yen-denominated ABS business in Japan. The new Tokyo-based team will be offering direct investment, securitization, and financing of yen-based CMBS, RMBS and other cash flow producing assets such as credit cards. Leading the new business is Yoshinari Kawai who was hired as managing director and head of ABS finance for Asia as well as a team of six securitization professionals. The new hire was most recently head of securitization, Asia, for BNP Paribas Securities.
Andy Dunlap joined 1st Service Solutions, a Grapevine, Texas-based intermediary for CMBS borrowers and servicers, as vice president. Previously, Dunlap worked in commercial mortgage loan originations at Dallas-based, BMC Capital and commercial mortgage portfolio management at Prudential Asset Resources.
Andrew Davidson & Co. has hired Steve Hovagimyan as director of strategic development. Hovagimyan will manage the company finances and secure funding sources to capitalize on the firm's growth opportunities, including the expansion of the company's product lines and its geographical reach. The new hire joins Andrew Davidson from Edison Venture Fund where, as director business development, he led the group in generating new investment opportunities, specializing in capital markets technology, education IT and interactive marketing. Before Edison, he was director of strategic investment group for Instinet, a network-based transaction system and brokerage company.
CIFG is bringing its brand of bond insurance to the vast California markets, after company recently secured its license to conduct insurance business in the state. "Our California license allows us to better serve our clients and expand our market presence," said Jacques Rolfo, CEO of CIFG. "We look forward with keen interest to working on transactions with California issuers, investors and other financial professionals."
Wachovia Securities is creating a wholesale-lending division by bringing together its American Mortgage Network and Wachovia Mortgage Third Party Lending businesses. The new unit, which will be named Wachovia Securities Wholesale Mortgage, is going to be part of the investment banking group. The two entities combined had a production of $19 billion in 2005. The effective date of the new name will be announced soon. The Charlotte, N.C. as well as San Diego offices of the two companies will remain the base for the new division.
Calyon completed a private placement of a risk-linked securitization based on the senior and the mezzanine portions of a $128 million reference portfolio of catastrophe bonds and insurance-linked derivatives. The deal dubbed Pinnacle includes a $33 million and $30 million mezzanine and senior tranche, respectively. Fifty percent of the senior tranche was rated A+' by Standard & Poor's. The transaction has a one-year maturity. The transaction is backed by a reference portfolio of diversified hurricane and earthquake risk in the U.S. All underlying contracts are indexed either to market losses or based on modeled losses.
Funds of hedge funds are becoming one of the most common issuers of CDOs backed by hedge fund shares or interest, or CFOs. Using a CFO structure, fund of funds managers can earn fees associated with managing the deal, as well as cater to investors across a range of risk appetites. "Many of the fund of funds firms that have used CFO structures are motivated by the ability to finance their hedge fund portfolios using relatively cheaper, longer term and more stable funding," Standard and Poor's analysts wrote in a recent report.
Credit Suisse in May 2002 credited itself with launching the first-ever public securitization of a fund of hedge funds. The deal, Diversified Strategies CFO S.A., totaled $250 million, had five tranches and a five-year maturity. Triple-A notes were 50% of the deal and priced at 60 basis points over six month Libor; the debt tranches were oversubscribed. Investcorp was the deal's manager.
Last week Moody's Investors Service released two new sets of performance and portfolio statistics on U.S. credit card ABS along with a report that examines the value of the data now required of issuers under the Securities and Exchange Commission's Reg AB. Reg AB requires all issuers of publicly registered credit card ABS to increase disclosure by adding to their previously published data with further information on credit scores, static pool data and payment metrics. Moody's Credit Card Reg AB Database consolidates this information across issuers, providing investors a one-stop resource.
Last week, the International Swaps and Derivatives Associa-tion (ISDA) and the International Association of Credit Portfolio Managers (IACPM) published a credit capital model study that suggests regulators should consider an internal models-based approach for the calculation of regulatory capital, similar to the use of VAR models for market risk. "A benefit of harnessing credit capital models to the process of calculating capital adequacy is that the models capture the important effects of portfolio composition in an intuitive and understandable manner," said Michel Araten, managing director, global credit risk management at JPMorgan Chase and chair of the projects steering committee. "We have reached a point in the evolution of credit models such that an internal models approach should be considered for the calculation of regulator capital." The study, which involved 28 financial institutions, spanned over two years and the hypothetical portfolio is available as a database from ISDA and IACPM upon request
The Information Management Network is planning a busy four-day industry bash in Orlando next month. On the agenda: a separate, one-day event for asset-backed commercial paper and structured investment vehicle professionals, two new advisory boards, and coverage for new products, such as the covered bond market, which is an emerging market in the U.S. The trade association will introduce two new advisory boards - one for the U.S., and another for Europe. Another major feature in IMN's Orlando conference is a separate, one-day event tailored for the ABCP and SIV markets. Sparing no expense, sponsors will put on a separate cocktail reception for ABCP and SIV delegates at the Ritz-Carlton. IMN will stage the entire four-day event, which runs from Nov. 5 to 8, at the JW Marriott/Ritz-Carlton Grande Lakes Resort. By press time, IMN said, it had attracted nearly 1,000 early registrants for the event.
Existing home sales fell in August for the fifth consecutive month, but the dip was minor and was focused on condos/co-ops, which dipped by 3.5% while sales of existing one-family homes were unchanged in the month. Even though resales in August were close to 13% below the year-ago level, the average figure this year is only 6% below last year's annual pace, which underscores the fact that the slowdown in this segment of the housing market seems to be orderly thus far, said analysts from RBS Greenwich Capital. In terms of the different regions, the Northeast (+1.7%) and Midwest (+0.7%) were offset by dips in the South (-0.8%) and West (-2.3%). RBS Greenwich also noted that inventories continued to rise last month, as the number of homes for sale increased to an annualized rate of 3.92 million units Both the number of homes for sale as well as the slight dip in demand boosted the months' supply figure to 7.5 months, which is the highest reading since April 1993. According to RBS, this is well above the six- month figure the most builders consider to be indicative of a healthy balance between supply and demand..
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