United Capital Markets came out swinging last week in response to a New York Post article, which accused the company of losing some $68 million on a 10.6% stake in subprime credit card company CompuCredit. In an apparent case of guilt by association, CCRT's share prices have wavered along with those of subprime mortgage lenders, from nearly $40 a share in January to as low as $26 in recent trading. UCM, calling the analysis "wildly inaccurate and reckless." UCM did not disclose if it has lost money on the CompuCredit trade, only that its net gain or loss is less than $5 million.
Prudential Investment Management-Fixed Income named Joe Lemanowicz, former head of high yield credit research, as head of the U.S. bank loan portfolio management team. George Edwards, previously a high-yield portfolio manager, also joined the team. Edwards will work closely with PIM-Fixed Income's European bank loan team on multi-currency CLOs, while maintaining his current responsibilities overseeing high yield bond assets in the firm's CDOs. Lemanowicz has more than 25 years of experience at Prudential and 14 years experience within Prudential's private fixed-income group. Edwards has almost 24 years of experience at Prudential and 17 years experience as a high yield manager. Newark, N.J.-based PIM-Fixed Income managed some $194 billion in assets as of Dec. 31, 2006.
Lee Rochford is joining the Royal Bank of Scotland as head of European financial institutions ABS, according to news reports. He will move to RBS after just nine months at Wachovia Securities, where he joined as a managing director in principal finance last June (ASR, 06/12/06). Wachovia hired Rochford from Credit Suisse where he was managing director and head of European asset finance, a group in charge of all European securitization and principle finance activities across multiple jurisdiction and asset classes.
Derek Armstrong, former director and head of Goldman Sachs' Asian leveraged finance business excluding Japan, joined Credit Suisse, as its managing director and head of its debt-financing group for Asia Pacific, also excluding Japan. The move is a return trip for Armstrong, who was head of capital markets for southeast Asia in Hong Kong for nearly four years before joining Goldman Sachs in October 2004, the Financial News reported. Armstrong reports to Vik Malhotra, head of global market solutions for Asia Pacific, and co-heads of fixed income capital markets for Asia, Lars Sorensen and Anton Douglas.
The Bank of America is said to be preparing a 20 billion ($26 billion) covered bond program backed by U.S. home loans. The transaction will use structured finance techniques, rather than a prescribed covered bond law to meet U.S. banking requirements. Societe Generale analysts, however, said that collateral for the pool would be structured differently than in the U.K. A mortgage backed bond rather than a specific pool of loans will act as security for the covered bonds.
According to market headlines last week, Barclays has entered advanced talks to sell its subprime credit card unit Monument to U.S. lender and credit card issuer CompuCredit (CCRT). The Financial Times reported last week that, at this stage, there is no information on how much the unit would sell for. Barclays bought Monument from U.S. lender Providian in 2002 for over $600 million. Monument makes up a portion of Barclays' credit card business and includes the bank's customers with a poor credit history. The sale is believed to mark the bank's desire to move away from lending to riskier customers.
Markit Group announced last week that it will pair up with Quintillion, a Dublin-based fund administration services company to provide their mutual customers with independent derivatives valuations on their complete portfolio of derivatives positions, including commodity, credit, equity, currency and interest rate swap instruments. The effort will also provide closely integrated fund administration services.
Chicago-based utility company Commonwealth Edison might see ratings on its $3.2 billion of mortgage-backed securities downgraded, if political maneuverings result in a rate freeze, said Moody's Investors Service, which put all of the company's debt securities on watch for possible downgrade. Specifically, the Illinois House recently approved, by a 92-5 majority, legislation that would support a rollback of electric rates to 2006 levels, plus the enactment of a three-year freeze through 2007. Support for a rate rollback also appears to be gaining traction in the Senate. "Although ComEd's transition to market generation rates has been met with relatively limited negative customer reaction, increasing support for a rate freeze and continued political intervention in the utility regulatory process continues, heightening credit risk for investors.
Fitch Ratings last week said U.S. mortgage insurers are not in jeopardy because of their exposure to the subprime mortgage market. The guarantors have roughly $24 billion of net par exposure to HEL securitizations, according to the rating agency. And while they will not be immune from soured performance, the exposures are likely to be small relative to each company's capital base and level of earnings, Fitch wrote in a report on the matter. More then 70% of the total exposure among the companies is rated triple-A or double-A. Impac Funding Corp. securities had exposures of $6.4 billion, second to Ameriquest Mortgage Corp., which had $9.5 billion insured. Financial Guaranty Insurance Co. and Ambac Assurance Corp. were cited to have the largest aggregate exposure to subprime issuers mentioned, while Financial Security Assurance and FGIC are on the hook for insuring 60% of Ameriquest's insured securitizations.
Blackstone acquired the Tussauds Group for GBP1 billion ($1.3 billion) from Dubai International Capital last week, and plans to merge the company with Merlin Entertainments Group, which it also owns. Additionally, the company amended the terms of an earlier proposed offer to buyback the Tussauds securitized bonds. According to Deutsche Bank analysts, the modifications call for withdrawal of the offer for make whole or early tender premiums for the remaining fixed rate bonds, effectively proposing call prices flat to gilts.
Equipment finance provider Balboa Capital Corp. recently priced a $100 million transaction, its first term securitization through its own trust. The company, which launched in 1988 and provides equipment lease financing to small firms, has tapped the capital markets once before. In 1997, Balboa Capital Corp. sold $3.5 million in lease-backed certificates to an asset-backed commercial paper conduit.
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