GE Commercial Finance has appointed Michael McGonigle as managing director of trade accounts receivable securitization within its corporate lending business. McGonigle will head up the team that focuses on providing financing of $75 million or more to corporate borrowers by securitizing trade receivables. The new appointee was most recently managing director within GE Corporate Lending responsible for providing junior capital debt solutions to clients. Before this, he was managing director of GE Bank Loans, leading a team handling distressed bank debt investing and loan participations. McGonigle joined GE in 1982, and has held different positions within the organization, including loan origination, underwriting and risk management. "With years of corporate finance experience, Mike and his team are uniquely qualified to help clients gain smarter capital through this alternative source of financing," said Tom Quindlen, president and CEO of GE Corporate Lending.

The Blackstone Group is purchasing Equity Office Properties (EOP) for $20 billion. As part of the acquisition, Blackstone will also assume $16 billion in debt. According to CMBS analysts from Merrill Lynch, this merger will be the largest takeover of a real estate company in history. The purchase price is equivalent to 8.5% premium over EOP's Nov. 17's closing stock price and is also a 20.5% premium above the firm's three month average closing price. Merrill further said that this $36 billion transaction overshadows other major leveraged buyouts that were announced this year, including the $33 billion acquisition of HCA, which is the biggest U.S. hospital chain. In terms of EOP's CMBS exposure, Merrill Lynch said that the acquired company has only, on occasion, used the CMBS markets for financing. Additionally, Merrill analysts also said that only a comparatively small amount of EOP's assets are encumbered by securitized debt.

ABN Amro has closed an innovative securitization of natural catastrophe risk using a credit derivatives approach to distribute risk exposure. The deal dubbed Bay Haven offers the first double-A rated natural catastrophe exposure, designed to attract a new set of investors to the traditionally noninvestment grade market. The underlying assets are composed of catastrophe industry loss warrants (similar to credit default swaps) rather than catastrophe bonds. The deal priced at 150 basis points over three-month dollar Libor on the double-A tranche and 425 basis points over the same on the triple-B minus tranche. The product allows investors to take exposure to risks including Californian and Japanese earthquakes and European windstorms.

Last week, the International Association of Credit Portfolio Managers released a letter calling for the inclusion of standard cancellability provisions in LCDS contracts, or agreements involving credit default swaps on loans. The letter specifically focuses on the fact that risk managers use LCDS to hedge specific obligations, usually syndicated secured loans, and need to be able to cancel matching swaps contracts if the underlying loans are called. "The syndicated secured obligations that loan portfolio managers want to hedge are frequently repaid or refinanced," Som-lok Leung, executive director of the IACPM, said. "Risk managers have to be able to cancel the related swap or there will be a mismatch between the hedge and the underlying loan asset when it's refinanced. At the very least, that can increase overall hedging costs." The IACPM sent the letter to the International Swaps and Derivatives Association. which has developed standard documentation covering LCDS contracts in the U.S. and is expected to do the same in Europe.

According to the latest Fitch Ratings U.S. CMBS Loan Delinquency Index, the vintage 2004 transaction delinquency rate is rising. Vintage 2004 CMBS delinquency rate went up 34 basis points to 0.39% in 2006, as the overall delinquency rate dropped 28 basis points to 0.51% in the same time period, according to Senior Director Patty Bach. This vintage's delinquency rate at 0.39% is higher compared to 2003's and 2002's delinquency rate of 0.20% and 0.36%, respectively. Also, 2004's delinquency rate has risen 34 basis points in 2006, compared to 12 basis points and 18 basis points drops for vintage 2003 and 2002, respectively. Bach said that vintage delinquency rates are expected to increase for the first eight years of seasoning and then taper off, which is similar to historical loan default performance. The most recent rise in vintage 2004's delinquency rate is a result of four crossed loans secured by multifamily properties in Nashville, Tenn., and a large Texas retail property that contribute 13 basis points and 11 basis points, respectively, to 2004's overall delinquency rate.

Three familiar faces from the ABS world were just named to the inaugural "40 Under 40 in Investment Banking" list published by Investment Dealers' Digest, a sister publication to ASR. Recognized for being deal makers who represent the best of the next generation of the capital markets are, in order of appearance, John Devaney, founder, CEO, United Capital Markets, T. Troy Dixon, head of passthrough mortgage trading, Deutsche Bank and Chris Ricciardi, CEO, Cohen & Co..

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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