Despite UBS weekly report Mortgage Strategist stopping publication, as of Friday, Oct. 10, Head of Mortgage Strategy Laurie Goodman was still with the firm. But, source familiar with the situation said she likely will leave the Swiss banking giant which has, in recent months, dramatically reduced its presence in the mortgage debt market. Thomas Zimmerman, managing director and head of ABS and mortgage credit research at UBS, also forms part of Goodmans team
and contributed to the Strategist. According to published reports, Goodman launched Mortgage Strategist while she was at Paine Webber in 1993. Before
Paine Webber, Goodman also worked at Merrill Lynch, Eastbridge Capital and Goldman Sachs.
O'Melveny & Myers hired two transactions lawyers, Kenneth Yellen and Demetrios Xistris, in the firm's investment funds and securitization practice. Yellen joins the firm's Washington, DC, office as partner, and Xistris join the firm's New York office as senior counsel. Yellen and Xistris are the most recent additions to O'Melveny's rapidly growing finance practice area. The firm hired Neil Campbell, a structured finance partner in Hong Kong, earlier this year. Finance and restructuring partner Huey Yann Thong, who has securitization deal experience, joined O'Melveny's new Singapore office in August. Additionally, counsel Bronwen May focuses on derivatives in the Hong Kong office. Yellen's practice focuses on structured finance and securitization, and his experience includes the representation of issuers, underwriters, placement agents, collateral managers and other market participants in connection with CLOs, CDOs, derivative securities, repackaged securities and other structured financial products. Before joining O'Melveny, Yellen was a partner with McKee Nelson. Xistris spent 15 years as managing director at the prominent investment banks JPMorgan, BNP Paribas and, most recently, Societe Generale, heading the in-house legal teams advising the banks on all equity and equity derivatives activities, including structured products; hedge fund derivatives; corporate, monetization and hedging deals as well as various equity finance agreements and activities. He has significant experience with all other derivative asset classes and with master netting and trading agreements and collateral documentation, and he has worked on a number of derivative and financial products business line acquisitions.
Akin Gump Strauss Hauer & Feld LLP has opened an office in Abu Dhabi, United Arab Emirates (UAE). The firm has moved six Akin Gump attorneys to start the office. The attorneys currently located in Abu Dhabi include Natasha Kohne, who has relocated from New York to be the managing partner of the office. Corporate partners Lee Kolodny and Elisabeth Cappuyns, who have relocated from Los Angeles and New York, respectively, will support Kohne. An additional three associates from New York and London have relocated to Abu Dhabi to round out the team that will be working in the Abu Dhabi office from the outset. The firm expects that, over the next three to four years, the office will grow to 20 lawyers or more.
Citigroup is largely exiting the wholesale mortgage business. A downsizing plan circulated internally on Tuesday stated that Citigroup will downsize the number of outside mortgage brokers it does business with around the U.S. to 1,000 from about 9,500. The firm will also lay off about 500 sales and operations employees in its CitiMortgage division. Citigroup is downsizing its wholesale mortgage business because of the current business environment, according to published reports.Citi plans to eventually consolidate its remaining sales and operations workforce, which now works out of a handful of centers all over the U.S., into hubs in St. Louis and Dallas. The reports said that among the mortgage centers likely to close is one in Atlanta, which sells mortgages through Citigroup's Primerica unit, the reports said.
Jefferies & Co. has hired Kelly Holloway as a senior vice president in the firm's fixed income group, where he will focus on selling and trading U.S. agency bonds, corporate bonds, MBS and other fixed income securities for institutional investors based in the Middle East. Holloway joins the firm from Vining Sparks, a regional broker-dealer based in Memphis, Tenn., where he spent ten years, most recently selling U.S. agency bonds, corporate bonds and MBS to foreign banks, largely in Eastern Europe and the Middle East. This is one of several additions to Jefferies' fixed-income group within the past six months. Others include four senior professionals added to the firm's emerging markets fixed income sales and trading unit; two senior hires to the high yield, distressed and loan sales and trading unit; the hire of Robert Harteveldt from Bear Stearns as chairman of fixed income and a member of the firm's executive committee; and the addition of an entire MBS team. Jefferies' broader fixed-income effort includes more than 150 professionals actively trading high yield, distressed and convertible securities, as well as bank loans, corporate bonds, U.S. government agency securities, mortgage-backed securities, municipal bonds and emerging markets debt.
Citigroup has reorganized its debt capital markets group in Europe into three areas, according to the Financial News. This is the first structural change and management reshuffle in the business since Eirik Winter took charge of the division in July. The bank has created a syndicate and risk group, an origination and coverage group and an advisory and products group under Winter, according to an internal memo seen by Financial News. Among the changes were Peter Apostolicas and Peter Charles will co-lead the syndicate and risk group, which will include all bond syndicate functions, as well as underwriting for any of its corporate, financial, sovereign, agency, high-yield, emerging markets and covered bond clients.
Fitch Ratings said that residual value (RV) risk in European auto loan and lease transactions may be impacted by adverse developments in the auto industry, such as higher fuel prices and falling car sales of luxury vehicles, which has been the trend in the U.S. This negative trend has been driven by rapid oil price increases over the past 12 months and soaring gas prices. Fitch said that the majority of its rated European auto loan or lease transactions tend to include a limited percentage of luxury cars and SUVs. Fitch does not expect RV risk to face the same experience as in the U.S. However, RV risk in European structured finance transactions may be impacted by increased pressure as reflected in the lower vehicle registrations in the new car segment across Europe. Sales of new cars in Europe dropped 7.9% in June, 7.3% in July and 15.6% in August over previous year sales.
The Bank of England and the European Central Bank coordinated rate cuts of 50 basis points. "This is the first coordinated rate cut since after the 9/11 attacks, and markets had largely discounted that such a move would take place imminently," said Paul Niven, head of asset allocation at F&C. The move demonstrates that central bankers are undertaking aggressive and coordinated policy action in order to address current market dislocation through direct action on interest rates as well as liquidity provision. The central banks said that more rate cuts will be forthcoming in all major regions over the coming months. Niven added that if the financial stress does not intensify from here, the action may help to stabilize growth expectations for the coming year.
Legg Mason bought an undisclosed amount of ABCP from one of its non-U.S. money market funds. This allows the firm to cancel $460 million in credit-support agreements. The ABCP was issued by Axon Financial Funding and Gryphon Funding investment funds. Legg Mason has provided $2.8 billion in credit support to protect its money fund investors against losses since the credit crisis began, which considerably reduced the firm's quarterly earnings, according to published reports.
The Canadian Securities Administrators (CSA) issued a consultation paper outlining several securities regulatory proposals related to the Canadian nonbank-sponsored ABCP market. This paper comes out of an ABCP working group set up to address regulatory issues relating to the current credit crisis. Among the group's proposals is a regulatory framework that would be applied to credit rating agencies requiring compliance with the recently amended code of conduct established by the International Organization of Securities Commissions. The CSA is also considering requiring public disclosure of all information provided by an issuer that is used in rating an asset-backed security. The group is also proposing to amend the short-term debt exemption to make it unavailable for sales of ABS short-term debt including ABCP. This would require issuers who sell these products to do so with a prospectus, or under another exemption. Additionally, the group is seeking to reduce the reliance on credit rating agencies in securities legislation and is currently reviewing specific issues regarding mutual fund investments in ABCP, the CSA said.
The National Association of Realtors (NAR) reported that its Pending Home Sales Index for August jumped 7.4% to 93.4 - its highest level for 2008. Additionally, July was upwardly revised to 87 from a previous report of 86.5. The NAR attributed the gains to buyers taking advantage of low home prices and more affordable interest rates during the month. By region, pending home sales were up 8.4% in the Northeast, 3.6% in the Midwest, 2.3% in the South and 18.4% in the West.
Bank of America announced its 3Q08 earnings last week, about two weeks earlier than expected. Net income was $1.18 billion, or $0.15 a share, and down 68% from the same period a year ago. Results were worse than expected. In addition, the bank cut its dividend in half to $0.32 in order to add capital. The firm also announced plans to raise $10 billion in new capital, which it completed on the following day at $22 a share, down from its expectations of getting $28 a share.
New research from TowerGroup stated that proposed rules from the Financial Accounting Standards Board (FASB) governing asset securitizations, FAS 140 and FIN 46(R), along with downward pressure from the current credit crisis, would considerably change the ways banks and other lenders account for off-balance-sheet assets. The changes could impact trillions of dollars in consumer loans and potentially cut off sources of consumer borrowing when the market is experiencing a liquidity shortage. These proposed rules could have a significant and negative impact on credit markets, one that could potentially cost banks over $60 billion in annual earnings, the research note said. In a release, TowerGroup noted that the Federal Deposit Insurance Corp. stated that U.S. credit card issuers rely on ABS financing to for over 50% of their capital needs. The research firm said that implementation the changes could severely curtail securitization activity.
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