CDOs

Jefferies & Co. made news last week when it hired 10 senior executives for its mortgage-backed securities trading group, in an effort to expand its fixed-income business.

The three major rating agencies came under attack again last week when the U.S. Senate Committee on Banking, Housing and Urban Affairs held a meeting about the agencies' role in the current credit markets turmoil. Senator Christopher Dodd (D-Conn.) and Senator Richard Shelby (R-Ala.) presided over the hearings.

Continued downgrades of market value structures (MVS) - and subsequent restructurings in some cases - have called attention to their sensitivity to pricing dislocations.

At the onset of CDO troubles this past summer, market participants predicted that tough times would weed out the established players from the fly-by-night shops. As the CLO market begins to pick up, it appears the predictions might be coming true.

Springfield and Boston, Mass.- based Babson Capital Management has acquired Murray Capital Management (MCM), a distressed debt and special situations management outfit based in New York.

Fitch Ratings released revised criteria for rating market value structures (MVS) after a review that the rating agency first announced in December 2007. The review was a response to unforeseen stresses on current market value instruments.

The first quarter of 2008 brought a slew of grim announcements for the financial guarantor industry, including a decision by some to put new business on hold altogether. But despite market troubles, the monolines held on in the beginning of 2008, even if only by a thread.

The Basel committee last Wednesday announced plans to enhance Basel II, a move that involves some extra steps to "strengthen the resilience of the banking system."

It was not exactly a stunning comeback for the securitization industry, but last week's collection of deals marked something of a stepped up pace of issuance and there was talk of revived investor confidence in the industry.

ABN Amro ABS syndicate head Neil McPherson left the bank on April 10, according to people familiar with the bank. Market sources said that several people left along with McPherson, and suggested that the change was probably a result of downsizing after the company takeover by Royal Bank of Scotland. Company officials could not be reached by press time. McPherson joined ABN from Credit Suisse, where he was a managing director and syndicate head.

London-based credit asset manager Cairn Financial Products is now the successor collateral manager for White Marlin CDO 2007-1, a $1.2 billion investment grade corporate CDO.

Alistair Darling, the U.K. chancellor of the exchequer, said that the G7 leading economies need to take action to ease the ongoing strains on the global financial markets and to strengthen the financial system's resilience.

Moody's Investors Service downgraded Sigma Finance's Gordian Knot-managed SIV senior ratings to A2'/P2' from Aaa'/'P1' following a review of credit enhancement and impending liquidity problems.

With the current volatile environment, surveillance has become a key feature in the work of collateral managers and investors alike. In this vein, Deloitte & Touche - which has previously come out with the ABCP, ABS and CDO Suite products as part of its Securitization Office family of solutions - has released Surveillance Suite, which is a customized tool to help users track their portfolios.

As things fall apart at MBS and CDO operations throughout the securitization industry - creating a void in financial services - small teams of executives have begun to regroup as hedge and distressed-asset funds to start picking up the pieces.

For more than nine months, the market has been attempting to sort through the tangled web of counterparty risk that has entrapped Wall Street.

When the subprime RMBS and HEL markets began to fall apart, the market watched as billions in mezzanine CDO liquidations routed spreads, undermined investor confidence and siphoned liquidity from the securitization markets.

Local government bodies in the Australian state of New South Wales have been forbidden from making new CDO investments and other structured credit products until December 2009.

Camulos Capital closed Camulos Loan Vehicle 1 last Wednesday, kicking off the second quarter with positive news in the way of new issuance. The $731 million cash flow CLO, which is the first CLO for the manager, offered triple-A to double-B paper in five tranches priced at 85, 250, 300, 500 and 800 basis points, according to ASR Scorecards database. Morgan Stanley underwrote the deal, and Citigroup is the trustee.

Credit deterioration for U.S. CDOs was almost wholly contained to U.S. dollar-denominated resecuritizations in 2007, according to a recent study by Moody’s Investors Service. Moody's downgraded a total of 1,331 tranches of U.S. dollar-denominated resecuritizations in 2007, which accounted for 92% of the 1,448 downgrade actions for all CDOs during the year.