Securitization People and Markets

HSBC Securities has lost at least $45 million in its U.S. corporate bond desk trading operations, largely in telecom and Tyco International bonds, say fixed-income officials with knowledge of the situation. This hit, coming after a $15 million loss on the firm's U.S. Treasury desk and feeble bonus payouts for 2001, framed a dire picture for 2002 compensation and has prompted an exodus of senior staff of the corporate bond group over the past several weeks. There are just two people left on the capital markets origination desk, one of which is an associate. The decline in bonuses was particularly disappointing, say the officials, noting that expectations had been raised after the corporate desk turned an estimated $20 million profit in 2001.

Two portfolio managers are pointing to the shifting base of corporate bond investors, as well as the ancient Street practice of "pumping up the book" during deal pricing, to explain the recent ballooning spreads on new corporate issues.

Ted Greenspan, a senior utilities trader, has left Lehman Brothers, and will join Morgan Stanley as a principal early next month, according to Tom Thees, New York head of investment-grade trading at Morgan Stanley. Greenspan fills a void on the desk created by the departure of Mike Heaney, who is moving to London to become the firm's head of European syndicate.

Last week was modestly firmer through Thursday, say traders, with continued strong new issuance. Gaming, energy, and auto suppliers were among the better performing sectors, while wireless was flat overall. Here was selected action.

HSBC plans to double the size of its asset-backed commercial paper multi-seller conduit Bryant Park Funding to above $1 billion by this summer, says John Cutting, managing director and head of asset-backed securities. Bryant, launched last summer, has an overall maximum capacity of $5 billion. Jon Bottorff, managing director, who was hired by Cutting to run the conduit, says he wants to bring issuance to $2 billion by year-end and to $5 billion, next year (BW, 4/22). Once Bryant runs at full capacity, the bank will eventually consider creating a second U.S.-based ABCP conduit, notes Cutting.

Lehman Brothers is seeking to add selectively to the headcount in its London-based debt capital markets unit. Christian Wait, head of European DCM, says he does not have an exact number of new hires in mind, but he would like to add bankers where he can shore up teams. He adds that he is on the lookout for good people who have been let go from other banks. Wait was named sole head of DCM earlier this year, when Marco Figus, moved to become the firm's senior relationship banker for syndication.

Christopher Ayoub, former managing director and head of the core bond group at Merrill Lynch Investment Management, has retired after 20 years with the firm. In his job at Merrill, he oversaw $4 billion in taxable fixed-income, primarily investment-grade corporate bonds. Ayoub has been replaced by Patrick Maldari, according to Cristine Walton, a firm spokeswoman. He had been manager of the firm's low duration team.

Deutsche Bank has retracted statements it made in a recent research report on WorldCom Inc. In an April 12 high-grade weekly research report, Deutsche Bank stated "we believe the company is either headed for bankruptcy or a merger." Only five days later, it came out with a high-grade daily report that reads, "our comments regarding WorldCom, Inc. appeared in error due to an editorial mistake. We regret any misunderstandings that this may have caused." The move has several members of the fixed-income community questioning whether the firm's research group is autonomous from its investment banking operations. Deutsche Bank has not acted as lead underwriter in any of the company's debt sales within the past several years.

Lisa Gaffney has resigned from Deutsche Bank where she was a managing director and high-yield consumer products analyst. She wants to spend more time with her children, according to a fixed-income analyst who spoke with her. Gaffney and Andy Van Houten, co-head of high-yield research at Deutsche Bank, did not return calls.