Six Degrees Capital Management has hired Bernhard Fischer as managing director, overseeing the firm's New York City office. Fischer has over a decade of both rating agency and buy-side investment experience in new asset and esoteric ABS. Prior to joining Six Degrees, Fischer served five years as a managing director with Greenwich, Conn.-based Partner Re's new solutions principal finance group where he coordinated the analytical process for primarily mezzanine level risk for non-standard asset-backed deals. Fisher also spent 11 years at Standard & Poor's, where he was most recently a director within the structured finance asset backed new assets group.
XLCA has three new high-level executives. Russell Albers has joined the monoline as a managing director responsible for commercial ABS transactions and reports to Steve Czark, head of commercial ABS. David Beard has joined as a managing director responsible for underwriting consumer ABS transactions and reports to Richard Heberton, Chief Credit Office of XLCA. Kenneth Cheng has joined as a director and will lead the firm's efforts in the commercial real estate CDO space and report to Sohail Rasul, head of CDOs. All three executives are located in XLCA's New York City office. Prior to joining XLCA, Albers was a senior vice president of ABS at Friedman Billings Ramsey, where he was responsible for the establishment and development of the firm's asset backed finance group. Beard joins XLCA from Financial Security Assurance where he was a director in the mortgage finance group, which underwrites securitizations of first and second lien residential mortgage loans as well as related structured financings. Meanwhile, Cheng comes to XLCA after ten years at Standard & Poor's. His last role at S&P was as a director and analytical manager in the CDO group, where, among other responsibilities, he created and updated ratings criteria.
New York-based middle-market commercial finance company Churchill Financial opened a Chicago outpost last week. Hugh Wilder, managing director, will head the new office. Kevin Murray also joins as managing director. Wilder joins from his previous position as senior managing director of the global sponsor finance group at San Francisco-based GE Commercial Finance Corp. Murray joins from GE Corporate Financial Services, where he was a managing director of the global sponsor finance group in Chicago. Churchill hopes to broaden its coverage of the Midwest market, as the firm continues its national expansion plans, head of middle-market finance, George Kurteson, said in a release. The firm was founded in Feb. 2006, and in April 2007 Churchill Financial acquired Churchill Capital's mezzanine finance business. The Chicago office will open in late May.
Sridhar Bearlelly, the former global head of collateralized debt obligation syndication with Lehman Brothers, is joining New Jersey-based alternatives manager ZAIS Group. Lehman replaced Bearelly with Dorothee Fuhrmann in Europe - formerly co-head of Morgan Stanley's European CDO business - and Jason Schechter in the US, an internal move.
CMBS capital markets advisor Reliable Defeasance LLC has hired Mark Schultz as managing director. Schultz is responsible for directing the group that brings in Reliable's defeasance business. Aside from his capital markets experience, Schultz has a track record across a number of key real estate segments, including retail, multifamily, industrial and even mobile homes. Prior to joining Reliable, Schultz was CFO and financial director of box retail development firm Hopkins Real Estate Group. He headed up all debt/equity placements and originated and closed more than $150 million in new project debt. He was responsible for all finance, accounting and tax functions.
The Markit Group announced the launch of a daily consensus spread service for asset-backed credit default swaps last week. The prices, based on daily feeds from the market makers' books of record, will initially cover CDS referencing RMBS and CMBS. Markit said the service might be extended later to CDS referencing CDOs, student loans, auto loans and credit. The service helps satisfy accounting requirements of FAS 157, which comes into effect in November.
Putting polishing touches on rating agency reform, the Securities and Exchange Commission (SEC) last week adopted final rules to implement legislation enacted under the Credit Rating Agency Reform Act of 2006, which was last September. As always, credit rating agencies must get approval from the SEC to operate in that line of business. Among other rules, the SEC requires that rating agencies to submit annual audited financial statements and disclose and manage conflicts of interest inherent in disseminating ratings. It will also prohibit credit rating agencies from engaging in unfair, abusive or coercive practices.
Dexia, via its Dexia Bank Belgium, subsidiary closed a partially funded balance-sheet CDO deal on a $3 billion ABS portfolio. Dexia Capital Markets and ABN AMRO arranged the deal. The securitized portfolio comprised 127 different ABS, all rated triple-A by one or more rating agencies. The portfolio is diversified among a number of ABS asset classes that include student loans, RMBS and CMBS. According to a release from the company, Dexia is selling the credit risk related to the triple-A ABS portfolio to external parties through two credit default swaps: a non-funded super senior CDS with an undisclosed party and a junior CDS with Dublin Oak Ltd, which is a special purpose company registered in Ireland.
New York-based commercial and consumer finance company CIT Group announced that it closed the CIT CLO I last Wednesday. The $512 million transaction will invest in a diversified group of CIT-originated middle market loans, third-party originated middle market loans and broadly syndicated loans, the company said. This transaction is the first in a series of asset management initiatives to diversify and grow non-spread revenues, the company said. "The launch of this CLO supports our corporate strategy to build an asset management platform that will enable us to better leverage our originations capabilities and drive fee generation as we utilize our balance sheet more efficiently," Jeffrey Peek, CIT Chairman and CEO, said in a release.
In a report, Derivative Fitch last week said that though subprime closed-end second-lien (CES) RMBS deals are just a small part of the overall subprime RMBS universe, these deals are proving to be some of the worst performers in the first four months of 2007, prompting the rating agency to take a closer look at the potential impact of subprime CES RMBS on Fitch-rated CDOs. Fitch rates a total of 116 U.S CDOs with exposure to subprime CES RMBS transactions, though only 35 U.S. CDOs have exposure to the 2006 vintage subprime CES RMBS deals that are experiencing the most stress. Fitch said that these U.S. CDOs include 16 mezzanine SF CDOs, 11 high-grade SF CDOs, four synthetic SF CDOs, three commercial real estate (CRE) CDOs and one market value SF CDO. CES exposure in European CDOs is isolated to eight transactions with relatively mild exposure. Seven of the CDOs are synthetic transactions and one is a cash-flow transaction. The highest total exposure in the European CDOs is roughly 2.2% of the reference portfolio. Fitch has reviewed these CDOs and the underlying exposures to know the potential impact on the rated CDO notes, Fitch said.
Last week the American Securitization Forum announced the full program and confirmed speakers for its 2007 Annual Meeting. The keynote speaker at the gathering is Chairman Sheila Bair of the Federal Deposit Insurance Corp. Other highlights of the meeting are that it will feature current business issues, opportunities and future trends affecting ABS and that it will provide a recap of important legal, regulatory, accounting, capital and other policy developments, including presentations by senior regulatory officials.
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