Bear Stearns Asset Management is planning to launch a credit derivative product company. The triple-A counterparty will sell protection on single-name asset-backed securities, corporate credit and structured credit, said Ralph Cioffi, senior managing director at BSAM who heads the effort. Launching the CDPC will generate fees for BSAM, which will manage the entity under an asset management agreement. September is the penciled-in launch date.
Bear Stearns Merchant Bank is pumping in up to USD125 million toward the start up, and BSAM and its employees are dropping in another USD15 million. The company will act as counterparty on transactions that include selling protection on single-tranche ABS CDOs and single-tranche bespoke CDOs. It will focus on triple-B to double-A rated credits. It is being rated by Moody's Investors Services, Standard & Poor's and Fitch Ratings, and expects to receive a rating by August or September.
Brian Morrissey, formerly of AIG Financial Products, is the acting cfo of the CDPC. Cioffi says he plans to hire two to four credit and ABS analysts by August, in addition to the eight BSAM professionals dedicated to the project.
