UBS Global Asset Mana-gement recruited Liz Ward to shore up its fixed-income team. Ward will be based in London and will manage the global team of fixed-income capabilities managers. In this capacity, Ward forms the key link between UBS investment teams and the firm's client relationship managers. "Ensuring that the fixed-income capabilities managers are working well together on a global basis to deliver a consistently high-quality client experience will be a key element of Liz's role," said Ward's boss, Rob Gambi, deputy global head of fixed income, who himself joined UBS in 2006. "Liz brings a wealth of experience to the team, including 10 years in senior fixed-income roles with Russell Investment Group," Gambi added. As of the end of March 2007, specialist fixed-income mandates, worth SwF170 billion (around $142 billion) for both institutional and wholesale clients, accounted for 20% of UBS invested assets.
Societe Generale Corporate & Investment Banking hired Peter Melichar as vice president of CDO, origination and structuring. Melichar, who is based in London, will report to Tony Venutolo. His responsibilities include structuring and origination of cash products across asset classes and structure types. He previously spent six years at Citigroup, starting in 2001 as an analyst in the interest-rate swaps/options desk. He moved in 2004 to Citigroup's European CDO desk as a structurer, primarily focusing on cash flow CDOs of leveraged loans and ABS.
ACA Capital Holdings said it could lose money on contracts worth $4.5 billion in subprime mortgage securities from 2006 and 2007, according to investor disclosures on its Web site on July 12. Subsequently, its shares last Monday suffered their biggest drop since the company's IPO in November 2006, declining 22% to close at $6.59 and rounding out a 34% decline in the company's stock since it first posted its exposure. Standard & Poor's said it may lower its ratings on four CDOs managed by ACA, and Moody's Investors Service may slash ratings on three of its CDOs.
Cohen & Co., a Philadelphia-based alternative fixed-income asset manager, launched Synergy last week, a proprietary next-generation CDO portfolio management system. The new product is expected to enhance the firm's investment, surveillance and investor reporting processes. Some key features include the ability of portfolio managers to view their positions for each CDO alongside security performance information that is automatically updated each night. One function that is expected to go over well is an automated watch-list that flags all securities that fail specified performance criteria. The product also features an increased search capability, including the ability to examine all exposures to a particular servicer while displaying the current loss for each such security and the delinquency rates on the underlying pool. Synergy allows managers to view more than 150,000 securities across the market and is currently being used by Cohen's ABS CDO management unit, Strategos Capital Management. The program was designed by an internal team led by Chief Information Officer Mark Tolani and will gradually be available to Cohen's other CDO management units over time.
Fitch Ratings said in a report issued last week that the credit derivatives market is continuing to expand at a remarkable pace because of concern about a downturn. The total amount of credit derivatives bought and sold reached nearly $50 trillion at year-end 2006, an increase of 113% over the $23.4 trillion reported at the end of 2005. Fitch also estimated that $22.2 trillion of index products were bought and sold in 2006, compared with $20 trillion in single-named CDS. "Leading the charge for the growth in the credit derivatives market are the traded indices, which, for the first time, surpassed single-named CDS in volume last year, even though single-name usage itself continued to expand rapidly," said James Batterman, senior director and co-author of the report, in a release. Fitch's survey respondents expected the CDS market to continue its expansion, with CDOs, LCDS, and the traded indices noted as the biggest growth vehicles for 2007. The global insurance and monoline industries continued to be key net sellers of protection at $395 billion and $355 billion, respectively, at the end of 2006. The top reference entities in 2006, including gross sold and bought protection by trade count, were General Motors and Daimler Chrysler.
CIFG announced last week that its parent company, Natixis, has provided the company with an additional $100 million in equity capital, bringing the firm's total claims-paying ability to more than $1.4 billion. This comes on the heels of Standard & Poor's CreditWatch revision to negative from stable last month. The rating agency noted concerns relating to the ongoing support for the business from its parent. "[Natixis] is fully committed to us and to our plans for the future," Jacques Rolfo, chief executive of CIFG, said in a release. The CreditWatch had not been revised again as of press time.
Babcock & Brown Limited, a global investment advisory firm, launched an aircraft lease ABS deal through one of its subsidiaries, Babcock & Brown Aircraft Management. The transaction, called Babcock & Brown Air Funding I, Ltd., will issue $853 million in notes secured by leases on a pool of 47 aircraft. Credit Suisse is expected to act as lead underwriter for the deal, which is being marketed as a 144A transaction and is expected to close in mid-August. Fitch Ratings and Standard & Poor's are both expected to give the bonds triple-A ratings.
Wachovia Capital Markets released a follow up to its previous report "Investing in the Changing Face of America," entitled "Investing in the Changing Face of Real Estate." The new report will examine a range of topics from subprime lending to so-called "walkable urbanism", a commercial real estate development style that relies on mixed-use properties to replicate the convenience and cache of urban living. It also discusses the role of private equity to investing in India and China, the investment bank said. The subject matter was developed by surveying more than 100 of Wachovia's top investor clients to find out what they felt were the most important real estate issues. The bank has included a recommendations section highlighting the best ways to address these themes.
Caliber Global Investment has categorically denied it is selling its assets because of recent subprime woes, thus joining the growing number of U.K. firms that seek distance from the U.S. subprime debacle. It was claimed in press reports that Caliber, a $908 million fund, was shutting down after suffering losses due to investments it made in U.S. subprime MBS. Caliber's management company, Cambridge Place Investment Management, clarified that the selloff was part of "a broad ranging review of all aspects of Caliber's strategy and operations in order to maximize shareholder returns," according to a statement. A source at Cambridge said constraints on the publicly listed Caliber portfolio, such as inadequate liquidity, are behind the selloff, adding that investors are getting as close to net asset value as possible. Cambridge noticed many months ago that Caliber was a "suboptimal vehicle," the source said.
Fitch Ratings expects ratings performances for U.S. CMBS deals to remain strong for the rest of the year. Over the last six months, Fitch upgraded 561 classes and downgraded 19 classes of U.S. CMBS bonds. The ratio of 29:1 upgrade/downgrade represented a decline from last year's 35:1 ratio. This year's first quarter numbers remain strong, said Fitch Managing Director Mary MacNeill. The market is very healthy as Fitch upgraded seven transactions twice within the first six months of the year. Newer vintage transactions containing high concentrations of interest-only and highly leveraged loans will likely increase future defaults, said MacNeill.
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