CDOs

With the onslaught of illiquid assets - particularly displaced MBS and CDO bonds - the development of a market for these securities becomes essential as well as useful not only for the companies that profit from them, but more importantly, the economy as a whole.

Following through on a transformation plan announced last year, MBIA last week said it has restructured its insurance subsidiaries to form a new U.S. public finance-only insurer that will operate separately from its structured finance business.

On Feb. 4, Moody's Investors Service revised the methodology it uses to rate CLOs, spurring a rash of CLO downgrades that has yet to end. As a result, CLO managers have begun requesting amendments to their reinvestment periods to relieve the pressure, sources said.

Standard & Poor's has lowered its counterparty credit, financial strength, and financial enhancement ratings on MBIA Insurance Corp. (MBIA) to 'BBB+' from 'AA'. The outlook on MBIA is negative, according to a release from S&P.

"No matter how cynical you get, it is impossible to keep up." -Lily Tomlin.

Shares for troubled Belgian bank KBC suffered heavy losses this month amid concerns about the bank's exposure to fragile emerging markets as well as its need to raise fresh capital.

For CLO managers, watching the declining performance of their underlying collateral has been about as much fun as a Tijuana jail. And it doesn't look like they'll make bail anytime soon.

NewOak Capital announced today the appointment of David Bigelow as managing director of marketing. The new appointee will be covering institutional clients such as pension funds, public funds, endowments, private equities, and financial institutions.

Deloitte & Touche released two new modules for CDO Suite — an asset administration, compliance and reporting system for a variety of portfolio structures such as hedge funds and CDOs — that will allow market participants to become either providers or consumers of syndicated loan data.

There's little doubt among market participants that in the tainted universe of structured finance, the collateralized loan obligation has the greatest chance of survival. The CLO structure is sound and robust, they said, and CLOs are composed of straightforward assets whose origin is easy to determine. Yet, in a market where these products have to contend with forces stronger than their managers ever imagined, experts are forecasting a tough year for European CLOs-one in which the asset class overall will remain in hibernation, and some individual structures will become extinct.

CIFG Holding, the holding company for CIFG’s financial guaranty subsidiaries, said that John Pizzarelli’s employment as chief executive officer is ending upon the successful completion of a settlement reached between CIFG and its derivatives counterparties and insured bondholders on the company’s troubled structured finance portfolio.

CIFG Holding, the holding company for CIFG’s financial guaranty subsidiaries, said that it, along with its principal shareholders, Banque Populaire Group and Caisse d’Epargne Group, has reached a final settlement with credit default swap (CDS) counterparties and bondholders holding 98% of its gross par outstanding of ABS CDO exposures and certain specified CRE CDO exposures.

To combat a CLO market frozen stiff by a lack of new capital, price declines, and waning confidence, some firms are working on new CLO portfolio strategies to bring in business and keep current clients interested in the loan market.

Jefferies & Co., the principal operating subsidiary of Jefferies Group, hired three senior MBS and ABS institutional sales professionals to the Firm’s growing fixed-income sales and trading platform.

Fitch Ratings yesterday downgraded $10 billion and affirmed $435.9 million of rated notes across 16 CDOs backed primarily by trust preferred securities (TruPS), senior and subordinated debt issued by REITs, homebuilders and financial institutions that specialize in mortgage lending.

KBC group said in a press release last week that it expected its full-year net earning to fall by €900 million ($1.2 billion). This is a result of further downgrades by Moody’s Investors Service made on a range of CDOs held by the group.

Babson Capital Management is ramping up global distribution with the establishment of the global business development group, as well as the hiring of a new global sales head and its first sales leader for Australia.

Gulf Stream Asset Management said last week that it is establishing a credit dislocation fund and a multi-strategy credit hedge fund.

Morgan Joseph & Co., a full-service investment bank, expanded the firm’s analytics and trading group that operate in the secondary market for fixed-income structured products by hiring two new members to the team, as announced today by Matthew Stedman, the firm's head of sales and trading.

Weak economic conditions have put capital strains on trust preferred securities (TruPS) issuers, causing a rise in payment deferrals and defaults within pools of these assets, TruPS CDOs.