Anthony Thompson, a managing director at Deutsche Bank who oversaw global CDO research, has left the investment bank, according to sources familiar with the situation. Deutsche did not confirm Thompson's departure. Previously, he was a director at Goldman Sachs. Deutsche declined to comment.
Market sources familiar with the matter said that Michael Llodra has left his job as head of structured products and CDOs at JPMorgan Securities and is now working as a consultant for university endowments.
Wachovia Securities hired Jeremiah Keefe for its fixed-income division as managing director and head of distressed debt. Keefe will be based in New York City and will report to Tim Mullins, managing director and head of credit sales and trading. In his newly created position, Keefe will supervise a team managing the firm's distressed trading positions. He was formerly at Deutsche Bank, where he most recently served as director of distressed research in the firm's global distressed trading group. Before that, he was a principal at Blackstone Distressed Securities Advisors, where he helped start the company's first hedge fund, which focused on distressed securities in the U.S. and Europe. Previously, he worked in the fixed-income research group of MFS Investment Management and was a vice president in Merrill Lynch's global distressed trading group.
Kohlberg Capital Corp.'s wholly owned asset manager Katonah Debt Advisors (KDA) recently closed a $315 million CLO fund. Kohlberg Capital has acquired the most junior class of securities from the fund and is entitled to receive dividend distributions from such an investment, the firm said. This is the first of three scheduled CLO funds for 2008, Kohlberg said, adding that it has already accumulated $275 million of investments in its second fund. The CLO funds managed by KDA invest primarily in broadly syndicated non-investment-grade loans, high yield bonds and other credit instruments from corporate issuers. The firm said the debt is not related to companies providing mortgage lending or emerging markets investments.
GSC Investment Corp. recently closed a $30 million equity investment in a $400 million CLO. The CLO was 70% invested at closing and will invest primarily in U.S. senior secured leveraged loans. GSC Investment Corp. purchased the entire $30 million equity tranche of the CLO, the company said. GSC said it will also serve as fund manager and will earn approximately $2 million in management fees in the first year of the fund's operation. GSC Investment Corp. is a specialty finance company externally managed by GSC Group that invests primarily in first- and second-lien term loans and in the mezzanine debt of private and U.S. middle-market companies and in high yield bonds.
Clayton Holdings has agreed to provide important documents and the testimony of its officials to New York Attorney General Andrew Cuomo in exchange for immunity from civil and criminal prosecution in the state, according to published reports. In a statement released Jan. 26, the Shelton, Conn.-based company said that it has "entered into a cooperation agreement" with the attorney general's office and will tell what it knows about how Wall Street sold mortgage investments despite warnings from the mortgage due diligence company that the underlying home loans did not meet quality standards, reports said. "We have complied with a subpoena to produce due diligence reports on various pools of loans that we had reviewed for clients and on loans that had exceptions to lender/seller guidelines and were eventually purchased," said the firm's Chairman and Chief Executive Frank Filipps in a statement.
A recent report from Merrill Lynch said that American Express is expecting weaker credit performance in its card portfolios. According to Merrill, the net charge-off and 30-plus-days' delinquency rates for the firm's lending portfolio rose 100 basis points and 60 basis points, respectively, on a year-over-year basis. Meanwhile, these increased 60 basis points for net charge-offs and 30 basis points for 30-plus-days' delinquency rates on a quarter-over-quarter basis. The net charge-off and 90-plus-days' delinquency rates for the charge-card portfolio rose three basis points and 60 basis points, respectively, on a year-over-year basis. On a quarter-over-quarter basis, these rose by a basis point and by 0 basis points on a quarter-over-quarter basis. Management said that the weaker economic environment affected credit performance. Merrill analysts said that the company experienced greater deterioration in regions where the housing market has contracted more severely, such as in California and Florida, and in accounts with less seasoning and lower FICO scores.
Fitch Ratings last week downgraded IndyMac Bank's residential servicer ratings. The rating agency cut the bank's primary servicer rating for prime, Alt-A and subprime products to RPS2' from RPS2+' and downgraded IndyMac's special servicer rating to RSS2' from RSS2+.' The ratings remain on Rating Watch Negative. Fitch said that the rating actions reflect the underlying corporate rating of the company's parent, IndyMac Bancorp and IndyMac Bank, FSB, whose long-term issuer default ratings were downgraded to BB' from BBB-' on Jan. 24. The ratings remain on Rating Outlook Negative. "The rating actions also reflect the continued pressure on IndyMac's financial flexibility in the increasingly challenged residential mortgage market and its potential impact on IndyMac's loan servicing operation," the rating agency said in a release.
Democratic leaders of the House Financial Services Committee are looking at creating a federal regulator or modifying a multistate compact (defined as an agreement between and among a number of states) to increase oversight and offer more uniform standards for insurers of municipal bonds and other financial products, according to an article by ASR sister publication The Bond Buyer. Rep. Paul Kanjorski (D-Pa.) chairman of the committee's capital markets panel, talked about the regulatory options the committee is looking at in an interview with the paper. These options include creating legislation allowing for the creation of a federal regulator for insurers, or providing them with the alternative of complying with a federal charter. The insurers are now chartered by the states and follow state regulations, according to The Bond Buyer. Recently, Kanjorski said that he has launched an inquiry into the bond insurance sector and has requested information from federal and state regulators, asking whether statutory or regulatory reforms are necessary. He plans to hold a hearing Feb. 14 to discuss these issues. According to the paper, Kanjorski said insurers might prefer to be under a federal charter and a single federal regulator instead of having to conform to the current patchwork of 50 sets of state regulations.
Sallie Mae said last week that it has dropped its lawsuit against a group led by J.C. Flowers & Co., which walked away from a deal to buy the student lender. Sallie Mae had been seeking a $900 million cancellation fee from Flowers and the group it headed with Bank of America. Sallie Mae now says it has secured a new $31 billion financing deal from seven banks. Troubled by increasing loan defaults, last week Sallie Mae reported $1.6 billion in losses for 4Q07, which included $575 million to cover bad debt. Moody's Investors Service said last Monday that it is extending its review of the student loan firm for a possible downgrade. The rating agency said it will extend the review of Sallie Mae to account for the new $31 billion credit facility the company secured. Moody's will examine how the new financing will affect the lender's liquidity and financial flexibility. The rating agency said previously that it would complete a review by the end of January and will also assess the new credit facility's pricing.
GMAC-RFC Deutschland halted its German residential real estate lending as a result of the squeeze in ABS financing. A spokesperson, who cited the firm's unwillingness to pass the higher capital market costs onto its customers, said that the lending freeze should be temporary as the lender expects to return to business within three to five months. Deutsche Bank analysts said that though no mention was made regarding the mortgage servicing operations, they expect servicing to continue for now. The servicing functions in the EMAC-DE securitizations are split between GMAC-RFC and third party providers. The credit performance of the securitizations remain stable, Deutsche analysts said. "We believe any risks of servicing deficiencies to securitized portfolio performance are likely to be limited unless mortgage operations are wound up permanently," analysts said.
The article CS Streamlines Global Banking in ASR's 1/28/08 mentioned Credit Suisse's planned integration of several of its origination and business areas under one group and executive. Although this reorganization includes the CMBS origination part of the business, CMBS trading will remain a separate unit.
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