Departures continue at Morgan Stanley, apparently. Michael Dubeck, co-head of the bank's residential fixed-income unit left the bank recently, according to market sources. Sources said Bruce Witherell, managing director and co-head of the U.S. residential mortgage business remained at the bank. Morgan Stanley refused to comment on the situation.
Marc Michallet, head of the financial solutions group for Europe at Dresdner Kleinwort, has left the bank. It is understood that Michallet, who was based in London, left last weekend. Michallet joined Dresdner in June 2006 from CIBC World Markets, where he had been co-head of sales for Europe and head of structured credit origination for Europe and Asia. He was hired to manage the German bank's financial solutions group in Europe, which focuses on structuring and marketing derivatives-based deals for clients. Dresdner Kleinwort declined to comment.
TABB Group, a financial markets research and advisory firm, has recruited Andrew Howieson as a partner and managing director of TABB Group, Europe. In that capacity, Howieson will spearhead TABB Group's expansion into London and Europe's financial market centers. From 2005 to 2007, Howieson was a director for eSecLending, a global securities lending manager. There, he managed the London office's provision of global lending programs to major institutional investors. Before that, Howieson worked at State Street Corp. for 13 years, where he developed the firm's electronic marketplace for fixed-income securities transactions, before spending two years as a consultant.
Local Insight Media, on Oct. 18, closed a $547 million whole business securitization. Almost all the assets of two of Local Insight Media's operating units, ACS Media and CBD Media, were sold to two affiliated bankruptcy-remote SPEs, ACS Media Finance and CBD Media Finance.
With US Bank National Association acting as trustee, ACS Media Finance and CBD Media Finance, together with their direct parent, Local Insight Finance, issued $542,000,000 aggregate principal amount of Series 2007-1 Class A-2 Senior Notes and $5,000,000 maximum aggregate principal amount of Series 2007-1 Variable Funding Senior Notes. Local Insight Media through its subsidiaries is a provider of print directories and Internet-based local search services in the greater Cincinnati metropolitan area, Alaska and the Caribbean.
Clariden Leu, part of the Credit Suisse Group, licensed CATRADER - a platform for analyzing catastrophe reinsurance and insurance-linked securities - in order to assess and manage the risks associated with its portfolio of catastrophe bond investments. Clariden Leu currently manages over $70 million in insurance-linked security investment products. Catastrophe bond issuance volumes have already reached $6 billion for 2007, representing a 26% growth over 2006. The company provides catastrophe risk modeling and analytical services for insurance-linked securities. Parent company AIR Worldwide Corp. modeled the first large-scale catastrophe bond in 1997.
The Financial Stability Forum has been commissioned to write a report on transparency and accountability in securitization, French Finance Minister Christine Lagarde said at a finance industry luncheon in Paris last week. Proposals will be due in April, after which the Group of Seven will work with the International Monetary Fund to hash out specifics. The Financial Stability Forum was established after the Asian debt markets crisis in 1990; it is made up of international finance regulators and central bank officials and meets under the umbrella of the Bank for International Settlements.
Assured Guaranty has announced a $221 million pretax mark-to-market loss on financial guaranties written on credit default swaps for the third quarter 2007. Approximately 70% of Assured's unrealized mark-to-market loss on derivatives is due to a decline in the market value of high yield and investment grade corporate CLOs, which comprise about 55% of Assured's direct financial guaranty CDS exposure, the company said. It also noted that lower market values in the RMBS and CMBS markets contributed to third quarter losses. As of September 30, 2007, Assured had CDS net par outstanding of $62.3 billion, $61 billion of which was underwritten by the financial guaranty direct segment. The company also announced that third-quarter 2007 new business production, as measured by the present value of gross written premiums (PVP), was $133 million in the financial guaranty direct segment, a 46% increase compared to third quarter 2006. This is the highest financial guaranty direct quarterly PVP in the Company's history, Assured noted. The financial guaranty reinsurance segment's PVP was $33 million, a 10% decline compared to third quarter 2006. Assured will report full third-quarter 2007 results Nov. 8.
Option One Mortgage Corp. had their residential servicer ratings from prime products cut to RPS2+' from RPS1' by Fitch Ratings last week. Option One's residential primary servicer rating for special products was downgraded to RSS2+' from RSS1.' The downgrades reflect the underlying corporate rating of Option One's parent, Block Financial Corp. and its ultimate parent, H&R Block, whose senior debt was downgraded by Fitch on July 31, 2007 to A-' and placed on Watch Negative. The rating actions also take into account Option One's decreased loan originations, changes in credit lines, and the uncertainties regarding the sale of the servicing platform to Cerberus Capital Management, which is scheduled to close in the fourth quarter of 2007, Fitch said. The ratings remain on Rating Watch Negative. Additionally, Moody's Investors Service dropped Option One's primary servicer rating to SQ2' from SQ2+' and placed the company's SQ2' special servicer rating on review for a possible downgrade later in the week.
IndyMac Bank also took a hit to its ratings when its primary servicer rating of prime residential mortgage loans was downgraded to SQ2-' from SQ2' by Moody's Investors Service. The company's special servicer rating was downgraded to SQ3+' from SQ2-'. Although IndyMac has for the most part maintained servicing performance, Moody's said, the change in the company's strategic direction along with an adverse business environment may create challenges to the company's ability to restore profitability to historical levels, potentially impacting servicing quality, Moody's said. The rating agency has also placed the company's servicer quality ratings on review for possible further downgrade
HSBC Financial Corp. announced plans to shut down 30 of its 140 Canadian offices as part of a move that will cut hundreds of jobs. HSBC's decision will affect roughly 300 Canadian employees. The firm is closing its Canadian non prime, broker-based mortgage services in Canada. Published reports said that some of the employees affected by the closing, which will be completed on Oct. 31, will get other jobs in the firm. This move by HSBC comes a week after GMAC Residential Funding of Canada said it would restructure its Residential Capital mortgage operations and let go of roughly 70 of its 180 employees as part of a bigger move by its parent company to layoff a fourth of its 12,000 worldwide staff.
MRU Holdings, which offers federal and private student loans via its consumer brand MyRichUncle and through private label partners, has secured additional working capital from an institutional investor against residual interest on its recent $200 million ABS transaction. MRU Holdings issued a note of $11.2 million pledged against the book value of its residual interest from the firm's MRU Student Loan Trust 2007-A. Through this deal, MRU now has more than $20 million in cash and equivalents.
Accredited Home Lenders Holding Co. and unit Accredited Mortgage Loan REIT Trust said it has provided written notice to the New York Stock Exchange to voluntarily delist its REIT 9.75% Series A Perpetual Cumulative Preferred Shares. It will deregister the Preferred Shares and Accredited's guarantee with respect to the Preferred Shares. REIT is expected to file the Form 25 on or about Oct. 29 and the Form 15 for each of the Preferred Shares. The Guarantee will be filed about ten days afterwards.
Thornburg Mortgage has named Paul Decoff as its chief lending officer and promoted him to senior executive vice president. Effective Dec. 31, Decoff, who is now executive vice president in lending operations and product development, will replace Joseph Badal. Badal will be retiring from his positions as senior executive vice president, chief lending officer and member of the firm's board of directors.
Merrill Lynch reported a third-quarter net loss of $2.3 billion, or $2.85 per diluted share, significantly below net earnings of $2.22 per diluted share for second quarter 2007 and $3.14 for third quarter 2006, the bank said last week. Third-quarter 2007 total net revenues were $577 million, down 94% from $9.8 billion for the same period in 2006 and down 94% from $9.7 billion in second quarter 2007. Included in the third quarter losses was a writedown of $7.9 billion in CDOs and U.S. subprime mortgages, much greater than the incremental $4.5 billion the bank had previously said it had expected. In the third quarter, Merrill said it cut its exposure to CDO-related asset-backed securities by 53% to $15.2 billion from the end of the second quarter of 2007. Merrill also cut its U.S. subprime-related exposure by 35% to $5.7 billion in the third quarter. The bank also announced $463 million in net losses on its corporate and financial sponsor, non-investment grade lending commitments. The losses are reportedly the biggest to be reported from any securities firm in the third quarter.
Moody's Investors Service has predicted strong growth in Europe, the Middle East and Africa (EMEA) CMBS transactions, especially when comprised primarily of large multi-borrowers, according to its latest report: EMEA CMBS Q3 2007: Surveillance Review. Moody's is currently monitoring 207 EMEA CMBS transactions and has just dispatched their London-based communications strategist, Daniel Piels, to the Middle East, to help optimize their timely wire service reports from the region, according to a source at Moody's. Moody's noted that there was an increase in the number of CMBS transactions that reported potential hazards, but called the rise "marginal."
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