AIM Trimark Investments has launched the INVESCO Global Real Estate Fund. The new fund will make global investments primarily in real estate securities and real estate-related companies such as REITs. The fund focuses on total return through a combination of capital growth and income, AIM said. INVESCO's Real Estate team managed over $31.7 billion in assets including $9.1 billion is in real estate securities, as of Sept. 30, 2007.
Over the last year and a half, Deutsche Bank has been fortifying its presence in Latin America's structured markets. With director Brigitte Posch at the helm, the team of bankers devoted to the region has swelled from one -just her-about a year and half ago, to seven. In yet another sign that the cross-border arena is not where the action is, Posch said at IMN's recent conference, "Securitization in Mexico," that the team is throwing its weight behind domestic markets. And ABS playground Mexico isn't the only game in town. The bank is working on local deals in Peru and Colombia, the latter boasting firmly established ABS and MBS industries that have witnessed scant participation from foreign bankers and other overseas players.
Royal Bank of Scotland Group chief credit strategist Bob Janjuah estimated that the credit crunch would cause $250 billion to $500 billion of losses at banks and brokers around the world. The estimate includes not just losses on subprime-mortgage-related bonds but also the new accounting standard that goes into effect Nov. 15 known as FAS 157. It will force companies to put values on opaque securities and could lead to write-downs of as much as $100 billion at firms including Morgan Stanley and Goldman Sachs, according to Janjuah. If the estimate is accurate, it would mean the credit-market troubles that began this summer are just beginning. The total amount of write-downs already announced by Citigroup, Merrill Lynch and the other Wall Street firms is only about $30 billion to $40 billion. But Janjuah's number is in a league by itself. Not only is the upper end of his range roughly what the U.S. has spent on the Iraq war, it is about equal to the market caps of the three largest U.S. banks, Citigroup, J.P. Morgan Chase and Bank of America, combined.
ACA Capital Holdings reported a net loss of $1 billion for the third quarter of 2007. The company said the loss was a result of $1.7 billion of net unrealized mark-to-market losses in the company's structured credit portfolio. These losses were a result of ongoing RMBS trouble and resulting depressed market valuations, ACA said. Net income for the first nine months of 2007 was $7.5 million, a major drop from $40.8 million for the same period in 2006. The decrease was primarily due to asset impairments in the company's CDO Asset Management business and unrealized losses in its credit fund, ACA said.
Standard & Poor's said it will begin making its credit ratings and credit market information available to subscribers of Lewtan Technologies' ABSNet. Lewtan will now offer S&P's current ratings actions and presale reports on ABS, RMBS and CMBS. ABSNet users will also be able to view S&P research for deal-specific transactions, opinions on key risk and performance factors, commentaries on credit market developments and outlooks and reviews of global rating trends, the company said.
McKee Nelson recruited Alice F. Yurke as partner and co-head of the firm's structured products group. From the New York office, Yurke will work alongside the other structured products co-head, William Gray, to expand the firm's business in this market. Yurke, who joins from Morrison & Foerster, where she was a partner, has advised many financial institutions in structuring financial products for hedging, arbitrage, balance-sheet management and liquidity.
Ambac Financial Group has moved Paul A. Burke, managing director at Ambac, to a newly created position as head of fixed income investor relations for the financial guarantee company. Burke joined Ambac in 2005 and has been responsible for business development and client relationship management in the structured finance group.
Before joining Ambac, Burke was a managing director in the securitization business of JPMorgan Chase. He worked in both Asia and Europe on JPMorgan's Asian securitization team. Before his stint at JPMorgan, Burke held several positions in global asset-backed securities, including head of emerging markets securitization at Standard Chartered Bank and, head of the Latin American ABS team at Kidder-Peabody. Burke was initially an associate with the law firm of Debevoise & Plimpton.
CRE CDO issuance is set to decline over the next few quarters, according to a recent report from Moody's Investors Service. Indeed, the two most significant metrics for tracking commercial loan strength, Moody's debt service coverage ratio (DSCR) and its loan to value ratio (LTV), were weaker in the third quarter of 2007, the rating agency said. The DSCR - which provides an indication of term default risk - reached a new low of 1.22 for 3Q07, roughly half the level of the third quarter just two years before, Moody's said, noting that this indicated a pickup in term default risk. Overall LTV ratios reached a new high of 117.5 for 3Q07 conduit deals, which may represent the peak for the near term. This is because better-underwritten loans have yet to be widely securitized, the rating agency said.
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