A number of managing directors have left Dresdner Kleinwort in London as part of a job-cutting program. Up to 7% of Dresdner staff could lose their jobs. Jeremy Vice, head of collateralized debt obligation structuring, and Laurent Caraffa, a former head of capital markets in France, have left the bank. Ian Platt, co-head of primary rates; Henry Nevstad, head of credit flow products; Paul Thomas, head of credit sales, and Nick Morgan, head of financial institutions debt capital markets were also let go. Rick Weinstein, head of credit derivatives, also left the bank last week. The bank has cut 50 staffers in the U.S., while it remains in negotiations with banking unions about job cuts in Germany.
Canada's RBC Capital Markets has cut staff in its fixed income division, letting 41 people go from offices in seven U.S. cities including New York and Chicago. "RBC is in no way reducing its commitment to the U.S. or the middle-market business," a spokesman for the company said. "The goal is to align our operations in the U.S. the way we have them set up in other regions." The bank employs about 1,200 people globally in fixed income and hired 140 people in U.S. fixed income last year. This news follows cuts made at HSBC, which has also slashed up to 130 jobs in its global fixed income business. The most senior redundancies are believed to be in the U.S., with additional fallout looming in London and Hong Kong.
Dominion Bond Rating Service recently rated the Capital Auto Receivables Asset Trust 2006-2 auto deal with Standard & Poor's. This is notable because this is the first time that the Canadian rating agency has been one of only two rating agencies on a public auto deal. It is also the first deal where DBRS used its brand new rating methodology for auto loans called ROADS.
Fitch Ratings upgraded the rating on a $1.3 billion Major League Baseball (MLB) Trust to A', from A-'. The rating change reflects shored-up protection to note holders in the facility, thanks to a recently approved agreement between MLB's club owners and the baseball player's union. The agreement ensures players will stay on the job through the 2011 season. The deal is secured by the rights to receive certain payments shared among MLB clubs, including primary telecasting, radio broadcast revenues from national and international media contracts, as well as revenues from licensing and sponsorship contracts entered into by Major League Baseball Enterprises, as well as distributions from Major League Baseball Advance Media. Renewals of long-term broadcast agreements also secured the deal. Fitch noted that the new agreement promotes financial stability among MLB clubs through continued oversight of club level financial activities.
A group of 12 industry associations last week, including the American Securitization Forum (ASF), issued a joint statement reaffirming their commitment to promote fair and competitive markets in which inappropriate use of material nonpublic information is not tolerated. Amid concerns on the issue in the face of complex and ever-changing financial markets, the associations pledged to undertake various initiatives to inform, educate and provide additional guidance to their members, nonmembers and other interested parties. The joint statement also referenced the principles and guidance on the communication and use of material nonpublic information that has been previously issued by several associations. This statement is available on a number of the associations' Web sites, including ASF's, which is http://www.americansecuritization.com.
KfW raised more than 10 billion ($13.2 billion) in SME securitization volume the year, the bank said last week. In the past six years, the bank has securitized a volume of more than 100 billion in SME and housing loans in more than 60 transactions. The German promotional bank's PROMISE securitization platform (for SME loans) is expected to have the highest volume this year since its launch at the end of 2000. KfW said it welcomed the shift in SME funding towards capital market-based financing, which will allow the SME sector access to a larger credit supply and better conditions. In 2007, KfW is aiming to support transactions backed by portfolios of smaller credit institutions or those in which the underlying assets are loans to smaller SMEs. In addition, it intends to become more active in the new markets in Central and Eastern Europe, as lending in these areas are growing rapidly.
Markit Group Ltd. has launched a pricing service for loan credit default swaps (LCDS). The service provides same day spreads for over 300 reference entities and tiers traded in the European and North American markets. The new service draws prices from contributing dealers to create a composite that is made available at 4:00 p.m. daily in London and New York. Markit said that sell-side firms using the service will see spreads on a particular reference entity when there is a minimum of three dealers making markets in that name while buyside firms will be able to access even thinly quoted entities. Markit will also offer valuations on LCDS. The new service rounds off Markit's CDS and syndicated loan pricing services - the group launched its iTraxx European LCDS index, LevX, in October this year, which has helped drive liquidity." We expect to see enormous growth in the trading of single-name LCDS and LevX over the coming year, with interest in the product coming from a very broad cross-section of institutional investors," Matthew Smith, director and head of European loan trading at Deutsche Bank, said. "The introduction of Markit's LCDS pricing service will bring transparency to this new market which will in turn encourage greater liquidity and growth."
Fitch Ratings upgraded seven and affirmed 140 tranches of German RMBS because the German RMBS sector showed signs of stabilization in 2006 after the weak performance observed the previous year. The upgraded tranches are from deals that are well seasoned and have experienced healthy growth in credit enhancement levels. Although the overall performance of German RMBS has stabilized, the results of each analysis show that there is still a wide range of performance variation between transactions. Fitch said that specific portfolio characteristics, such as borrower, loan, property and regional concentrations may vary significantly and can have a direct impact on the performance of transactions.
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