Sources said that Michael Blum, who was the global head of Merrill's ABS business, has left the bank. Exact details of his departure were not available as of press time. Blum's leaving is in keeping with recent departures from the firm. According to ASR's 05/05 issue, Stewart Cutler, David Sobotka and Scott Soltas have all opted to take generous packages and will leave the investment bank by the beginning of June. Sobotka heads up the bank's fixed-income group, while Soltas is global head of the firm's mortgage business. Cutler, who is a managing director at the firm's asset-backed commercial paper group, will be replaced by Robert Little, who has been with Merrill Lynch for more than 25 years and who will now oversee all aspects of the bank's global money markets business.
McDermott Will & Emery has appointed two new partners in the securitization and structured finance group. Pierre Brochet joins the firm this month and Abesh Choudhury will take up his new position on July 1. Brochet joins the firm from the London office of White & Case. He specializes in structured finance, in particular synthetic CDOs. Choudhury will join the firm from Dewey & LeBoeuf, where he was head of their U.K. financial services regulatory practice. Paul-Michael Rebus, co-head of securitization and structured finance at the company, said that the appointments demonstrate the firm's commitment to its securitization and structured finance group.
Legal General Investment Management announced the appointment of Christophe Tamet as head of credit. He will report to Roger Bartley, head of active fixed income. Tamet's appointment should further strengthen the firm's fixed-income team. "Christophe's appointment underlines our continued commitment to building our teams with the best management talent," Bartley said. "His significant experience in global credit enhances our capabilities and further develops our plans to provide a best-of-breed fixed-income proposition for clients." Tamet was previously with JPMorgan Chase, where he was head of credit in the chief investment office. Tamet's experience includes corporate, ABS and structured credit markets, and he has extensive experience with credit indices, tranches and options.
Denver-based The Chotin Group has announced changes in its management team. Helen Dickens, president and chief operating officer, assumes all responsibility for The Chotin Group's asset management division. Dickens replaces Zach Pashel, who is leaving the company to pursue another opportunity. Steven Chotin, chairman and chief executive officer, will resume responsibility over the firm's daily structured finance activities and business development. As part of the change, the asset management company has launched a national search to find an executive who will work with Chotin in identifying new business and investment opportunities. Dickens has been with the firm since 1989. In her new role, she will work closely with Jeffrey Stemmermann, who continues as vice president and senior portfolio manager.
In a newly created position at Barclays global investors, Chip Stevens, who has extensive experience in the credit and derivatives markets, will be responsible for overseeing fixed-income trading in the U.S. and managing and developing the firm's U.S. broker/dealer trading relationships. Stevens will report to Marie Chandoha, head of the global fixed-income business. Stevens was most recently co-head of high yield trading at Deutsche Bank, where he focused on integrating the cash and credit derivatives (CDS) trading businesses. Earlier in his career, he managed Merrill Lynch's high-grade CDS trading desk in London and launched credit derivatives trading at Citibank. He began his career in compliance at Salomon Brothers.
Banks have disclosed nearly 80% of their total estimated losses from subprime mortgage debt, according to a Fitch Ratings report published last Wednesday. "It is Fitch's opinion that though there are likely to be instances where individual banks have larger losses from their subprime mortgage-related exposures, overall, as banks have disclosed close to 80% of the total estimated losses, further ratings impact is likely to be minimal," the rating agency said in the report. "However, it should be noted that rating actions are likely if performance of other assets deteriorates." Some of the heaviest losses related to subprime mortgage debt have been felt by Citigroup, Merrill Lynch and UBS. The rating agency said that as much as $1.4 trillion of subprime mortgage debt was underwritten in 2005, 2006 and 2007. Sloppy underwriting and a slowing economy could bring about $400 billion in losses, Fitch said. The rating agency estimated that as of May 2008, losses reported by banks related to holdings of subprime mortgage bonds, and CDOs backed by subprime mortgage debt, total $165 billion.
DBRS has revised its Canadian leveraged super-senior (LSS) CDO methodology. On Jan. 21, the rating agency announced that it had started to review its mark-to-market trigger methodologies in relation to LSS transactions, which has now been concluded. Under the revised methodology, mark-to-market triggers must be set at more remote levels in order for an LSS transaction to obtain a given rating. DBRS said that no rating actions will result from this revision. Four conduits were placed under review with developing implications on Jan. 21. One of these conduits has since had its rating discontinued, according to DBRS. Of the three remaining conduits, two have been downgraded as a result of failure to meet margin calls, and all three remain under review with developing implications, pending the resolution of restructuring negotiations among their various stakeholders, DBRS said.
Freddie Mac Wednesday reported a first-quarter loss of $151 million, or 66 cents a share, compared to a net loss of $133 million, or 35 cents a share, for the quarter ended March 31, 2007. The company reported a net loss of $2.5 billion, or $3.97 a share, in the fourth quarter of 2007. The housing agency said its credit-related expenses - provisions for credit losses and real-estate-owned operations expenses - totaled $1.4 billion in the first quarter, up from $912 million for the fourth quarter. "The provision for credit losses for both quarters increased due to credit deterioration in the company's single-family credit guarantee portfolio, primarily due to 2006 and 2007 loan originations. As delinquency rates increased, more loans transitioned from delinquency to foreclosure, and the estimated severity of losses on a per-property basis increased," Freddie Mac said, adding that the credit deterioration has been largely driven by a decline in home prices and other declines in regional economic conditions. The company said its estimated regulatory core capital was $38.3 billion on March 31, $6 billion above a 20% mandatory target capital surplus. But, the housing agency said it plans to raise $5.5 billion through sales of common stock and non-convertible preferred securities.
RealtyTrac reported that foreclosures in April increased 4% from March and were up 65% from a year ago. The mortgage data firm said that one in every 519 households received a foreclosure filing during the month. "The total number of U.S. properties with foreclosure activity in April was the highest monthly total we've seen since we began issuing the report in January 2005," RealtryTrac CEO James Saccacio said. He added that although a mere 2% of households nationwide are in foreclosure, these properties are contributing to the downward pressure on home prices through higher inventories. Additionally, Saccacio noted that this is affecting municipalities' property tax bases, and one city in California, Vallejo, has decided to file for bankruptcy. Nevada, California, Arizona and Florida continue to record the highest foreclosure rates.
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