Nearly two years to the day from his hire date, Randy White, one of United Capital Markets' star traders, is rumored to have left the firm. White reportedly made his exit on good terms. He joined UCM in late February 2005, as an ABS trader focusing on CDOs and pooled aircraft lease securitizations. Prior to UCM, White was a principal secondary aircraft and CDO trader at Wachovia, dating back to its days as First Union Capital Markets.
Word has it that New York City-based hedge fund Och-Ziff Management Capital Group is hoping to recruit a structured products trader. The global institutional asset management firm, with offices in the U.S., London and Hong Kong, oversees multistrategy hedge funds, and manages more than $16 billion in assets.
Merrill Lynch's Asian structured finance operations are under siege by rivals, with as many as 15 staff members on the way out the door, trade publication FinanceAsia reported late Thursday. George Sun, managing director for global structured products, had reportedly left for Bear Stearns. Three additional CDO specialists, including Vice President Sun Do Kim had reportedly left the Hong Kong office, along with a credit sale specialist out of the firm's Korean office. The moves were not confirmed, and some said recent Merrill hires outweigh the 15 losses. U.S. investment banks are eager to set up or expand structured finance operations across the burgeoning Asian financial markets, reportedly offering sizable salary premiums to do so.
GSC Partners hired Jim McCary as an analyst focusing on ABS and CDO credit. McCary, who starts at the firm on March 12, will also review deal documents and perform mortgage originator and CDO manager due diligence. McCary, who will report to Dan Castro, GSC's chief credit officer in its structured finance group, was an associate director at Fitch Ratings' CDO ratings group for the past three years. Prior to his stint at Fitch, McCary was at Merrill Lynch, where he was a junior analyst focusing on ABS.
Fitch Ratings launched its new global infrastructure and project finance team, which draws on senior analysts from its corporate, structured, project, and public finance groups. The new group will be globally responsible for the credit ratings of all types of debt, loans and bonds that relate to financing and refinancing global projects and infrastructure. Olivier Delfour has been appointed global head of the new group. Delfour was previously head of ABS EMEA and has been replaced by Philip Walsh. Fitch's whole business securitization team has also transitioned to the new group. The new team totals 24 analysts globally, but sources at the agency said the aim was to increase that head count to 30 within three months. "Growing demands on global infrastructure have led to a significant pipeline of large-scale infrastructure projects around the world. There is also a high level of fund raising in relation to acquisitions of existing infrastructure," Delfour said. "As the financing of these projects continues to shift toward the private sector, the market's need for a focused rating approach becomes acute. With the creation of this team dedicated explicitly to the sector, Fitch is meeting this demand."
Financial guarantor Assured Guaranty has promoted four of its staff members. Ashleigh Bischoff, who covers market value, middle market and broadly syndicated CDOs, was promoted to director. Patrick Mitchell, who focuses on trust-preferred CDOs, middle market and broadly syndicated CDOs, was also promoted to director. Both have been with the firm for two years. Meanwhile, Jorge Gana was promoted to managing director covering commercial ABS. Gana has been with the firm for under two years. Jack Gray was promoted to managing director focusing on financial guarantee and synthetic commercial real estate finance. Gray has been with the company for four years.
ACC Capital Corp. late last week found a white knight in Citigroup. The investment bank provided working capital and a credit line to the ACC companies, in the process becoming the chief warehouse lender to ACC. In return, Citi has the exclusive option to purchase ACC's wholesale subprime lending network Argent Mortgage Co. and servicer AMC Mortgage Services. ACC founder Roland Arnall also provided liquidity to ACC last week.
General Motors confirmed last week that it would not be filing its 2006 annual report with the SEC by its March 1 deadline. While it was the second year in a row GM has requested more time to file its annual report, analysts last week speculated that the delay this year likely stemed from subprime mortgage losses at GMAC's home lending unit ResCap. Loan-loss provisions and writedowns could cost GM between $900 million and $950 million in cash charges for the first half of the year, Lehman Brothers analyst Brian Johnson estimated. ResCap held $57 billion of subprime mortgages as of 3Q06, and had exposure to $1.4 billion of residuals.
Subprime market participants were peeved at Freddie Mac last week, after the GSE said that it would no longer purchase subprime mortgages that have a high likelihood of "payment shock." The move was seen as front-running expected federal guidelines, which are expected to frown upon shoehorning borrowers into loans mainly based on their ability to pay only the small introductory payments.
Utility holding company Texas Corp. is not expected to use asset-backed securitization as a way to finance or otherwise manage any potential debt from its proposed $32 billion buyout from an investor group led by Kohlberg Kravis Roberts & Co. The reason: State lawmakers would have to pass legislation to allow for such a transaction, said market professionals, and the legislators that are currently working with the utility holding company found out about the transaction a little more than a week ago. Any potential legislation to finance this situation would be different from the one that allowed for the $790 million Texas rate reduction bond issuance in May 2004. "I don't think an elected official would be interested in providing this authorization, especially since it is private equity financing," said one market professional. Any legislation for Texas Corp.'s current situation would have to benefit the entire wholesale utility market or the mass consumer market.
Golden State Tobacco Securitization Corp. is preparing to issue $4.12 billion in tobacco settlement asset-backed bonds. Proceeds from the sale will be used to refund all of the outstanding bonds from a 2003A issuance, the last time the issue came to market. The funds from the issuance will also pay a portion of the purchase price of the 2003A residual certificate, among other uses. Bear Stearns is acting as lead underwriter on the transaction, which is expected to close in about two weeks, and secure BBB/BBB/Baa3 ratings from Fitch Ratings, Standard & Poor's and Moody's Investors Service.
Stratford Receivables Co., the industry's first reduced-liquidity, multiseller extendible note ABCP program, added a $400 million dealer floorplan transaction, a triple-A-rated variable funding note. Barclays Bank administers the program, which is authorized to issue up to $20 billion of U.S. dollar-denominated ABCP, and up to $12.1 billion of extendible notes. Moody's Investor's Service rates the conduit P-1.
The Securities Industry and Financial Markets Association (SIFMA) formed a Mortgage-Backed Securities Due Diligence Managers Committee and appointed Bear Stearns managing director John Mongelluzzo as chairman. The committee validates that mortgage pools being bought for securitizations conform to characteristics in line with their specified level of risk and addresses issues important to the securitization industry. The committee plans to establish best practices, covering topics such as borrower fraud, integrity of a loan file and valuation tools such as how to value the real estate that secures loans. The committee also aims to establish an information network of parties such as mortgage servicers and sellers.
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