J.P. Morgan is ramping up its Japanese structured credit business to meet increased demand. To spearhead this effort, the bank has hired Mahesh Bulchandani, director and head of collateralized bond and loan obligations at Merrill Lynch in London, to head the business from Tokyo. Part of his mandate is to double headcount for the business to 12, said Jonathan Laredo, head of structured finance for Europe and Asia at J.P. Morgan in London. The group deals with both cash and synthetic products.
The structured credit business in Japan is growing fast, meaning the department has to be managed locally, said Laredo. The bank is structuring more synthetic CDOs because investors are demanding higher yields and more diversified credit exposure. In an environment where interest rates are falling worldwide, and corporate creditworthiness is deteriorating, these products are in demand globally. But, said Laredo, J.P. Morgan is hiring structurers in Japan because it was previously understaffed.
Market officials noted that with this hire and additional resources, J.P. Morgan is poised to do well in Tokyo. An official at a rival bank in London said Bulchandani was a great hire for J.P. Morgan because of his experience at both Merrill Lynch and Citibank, two houses that are at the forefront of the structured credit market. J.P. Morgan is in a good position to become a significant player in the market because of the bank's massive balance sheet, allowing it to manage its internal credit exposure using the product, as well as structuring arbitrage deals, according to Brent Eastburg, head of credit trading for Asia at Lehman Brothers in Tokyo.