Merrill Lynch brought to market late last month what is being classified as the first tax exempt CDO. The deal, arranged as a structured tax-exempt passthrough, consists of $418.5 million of senior, mezzanine, subordinate and junior certificates maturing August 2037. The transaction is backed by a portfolio of not-for-profit and other types of tax exempt middle-market corporations. Cohen Municipal Management, a division of Cohen Brothers Financial Management, will manage the deal. Nonprofit Capital and Shattuck Hammond Partners were sub-advisors to the transaction. The A-1 tranche of the deal carries a 9.1-weighted average life and priced at 55 basis points over.
Dillon Read Capital Management, the new alternative asset manager within UBS Global Asset Management, brought the $1 billion hybrid cash and synthetic Dillon Read CMBS CDO 2006-1 to market. The deal was anticipated to come with a $650 million unfunded super senior liquidity facility. The arrangers are aiming for a 73% portfolio share of CDS referencing CMBS and commercial real estate; 27% will include a mix of cash CMBS, CRE CDO notes and REIT debt. The deal has a five-year reinvestment period and 10-year maximum weighted average life. Dillon Read was formed from the more than 200 employees that encompassed UBS' principal finance and credit arbitrage and commercial real estate groups.
Isle of Man-based Cains Solicitors has hired banking and finance partner Marjena Fidalgo-Sokalski from Penningtons and securitization assistant Tim Shepherd from Conyers Dill & Pearman as senior associates.
Nicolas Trautwein, co-head of securitization at Commerzbank in Frankfurt, is moving to the group's subsidiary Eurohypo where he will head the German securitization team. Trautwein will report to Caroline Philips, Eurohypo's head of securitization. Trautwein will be based at Eurohypo's head office in Eschborn, Germany, heading a team of three. Eurohypo said it plans to make further hires to the team.
Lehman Brothers hired Raffaele Ricci from Dresdner Kleinwort Wasserstein as as managing director in its fixed income structured solutions group. He will report to Philippe Dufournier, head of structured solutions, Europe. Ricci was previously head of the financial solutions group at Dresdner where he worked on derivative solutions for banks and insurance companies across Europe.
Allen & Overy named partner Salim Nathoo global head of securitization effective Nov.1. Salim takes over from David Krischer, who founded the group in 1992. Krischer has been appointed global head of Allen & Overy's international capital markets practice. Nathoo and Krischer will retain their transactional work alongside these new roles.
Wilmington Trust has expanded its Corporate Client Services (CCS) business to Germany by hiring Florian Schluter as managing director of its new Frankfurt office. Wilmington has been active in Europe since its 2002 acquisition of SPV Management, described as a pioneer of the European securitization community now known as Wilmington Trust SP Services (London). The opening of the German office follows the establishment of a Dublin office in late 2004 as well as the hiring earlier this year of a London-based executive managing director, Christophe Schroeder, to lead CCS' European sales, service, and operations. Schluter joins Wilmington Trust from DaimlerChrysler Financial Services AG in Berlin. "Europe is increasingly becoming a driving force in our Corporate Client Services business, and Germany is a key market for us," said Wilmington's chairman and CEO Ted Cecala. "This expansion leverages our core services in a new market and reflects our strategy to invest in businesses with excellent growth potential."
Mark Mortimore was appointed as executive director to the world's first open-ended GCC-oriented Sukuk Fund, which is managed by Encore Fund Management, a subsidiary of Geneva-based Encore Management. The so-called Sanad Sukuk Fund, which is expected to launch in November, aims to allow Islamic investors a bond-like investment vehicle that is fully Sharia compliant. The fund is targeted to reach at least $100 million in size. Jawad Ali, a partner at King & Spalding's London office was named legal counsel to the fund, while Michael Gassner Consultancy will advise the fund in marketing, strategy and sales.
The Prieston Group, a provider of mortgage fraud protection, has hired mortgage banker Jon Daurio. The new hire is one of the co-founders of residential mortgage banker Encore Credit Corp. and its parent ECC Capital Corp. In his new position, Daurio will focus on institutional sales, strategic enterprise planning as well as acting as liaison to the Prieston affiliated legal group. His most recent experience focused on the scratch and dent sector. Daurio also co-founded Park Place Capital Corp., a special services company that had a scratch and dent business, in 2001.
Athilon Group Holdings, a provider of credit protection to banks and other financial institutions, has appointed Patrick Gonzalez as chief executive officer and as a member of the board of directors. Joseph Bauman, who is currently a member of the board of directors at the firm, has been appointed chief administrative officer. Gonzalez was most recently the company's COO and was a member of the management team that founded Athilon in 2004. Bauman was co-founder and former CFO of Primus Guaranty. Bauman also held leadership roles in capital markets groups at Bank of America, Citigroup, and Chemical Bank.
Radian Group Inc. last week reported $112 million in net income for the third quarter, a 31% decline from the $163 million earned a year earlier. Company representatives said results for the quarter were depressed by additions to loss reserves in its mortgage insurance business. The additions were attributed to new delinquencies, aging existing delinquencies and an increase in severity, due primarily to larger average loan balances. Radian also disclosed that its structured finance business in the quarter decreased, "reflecting market conditions and the tight-spread environment."
Housing starts rebounded 6% in September after dipping for three consecutive months since May, according to the Commerce Department last week. Both single-family, which increased by 4.3%, and multi-family, which rose by 12.7%, trended upward. August's initial estimate was also revised up slightly but this was mostly offset by a similar downward revision to July. "Although the headline figure rose last month, September's data probably do not signal that a bottom in groundbreaking activity has been reached, especially given that the permits continued to fall last month and that nearly the entire increase in housing starts was concentrated in the South," said analysts from RBS Greenwich Capital. Meanwhile, building permits dipped by 6% in September, which is the eighth consecutive drop, and fell by 28% from a year ago, pointing to further weakness in starts in the coming months, RBS analysts said.
DLA Piper US attorney Ellen H. Clark published a chapter in the upcoming Kluwer Law Law International's Innovation in Securitization, Yearbook 2006. Titled Developments in Derivatives and Synthetic Securitization Following the US Bankruptcy Reforms of 2005', the section focuses on the treatment of derivatives in the event of a counter party's bankruptcy or insolvency. Specifically, Clark tracks the impact of Title IX of the new bankruptcy reform act on financial markets and derivative products.
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