Merrill Lynch is making a push into the collateralized loan obligations business and has hired Wolfgang Schubert, v.p. in structured credit at JPMorgan in New York, as part of the effort. The firm has a strong collateralized debt obligation franchise in asset-backed deals, but has not made the same impact in high-yield deals referencing loans in the true sale, synthetic or hybrid markets, noted rivals. Schubert declined comment and Chris Ricciardi, managing director to whom Schubert reports, did not return calls.
CLOs have emerged as increasingly popular instruments over the past couple of years, noted one official, adding that leveraged loans outperformed bonds during the recent credit downturn. The recent scarcity of loans, however, has made it difficult for many managers to source true-sale deals, which has led to more hybrid and synthetic CLOs. For example, true-sale deals are increasingly taking on synthetic exposure through indices such as Credit Suisse First Boston's Select Aggregate Market Index "SAMI" (Secured) index (DW, 2/15).
Merrill's rivals said it is undertaking an ambitious growth strategy in its CDO business and has made several key hires to the division, including Ricciardi who joined from CSFB mid-last year. The firm is regarded as a leader in ABS deals such as trust-preferred and structured finance CDOs, officials said, adding it will be interesting to note how the firm builds its CLO activity.
At JPMorgan, Schubert reported to Maleyne Syracuse, managing director in global originations, structuring and execution, who did not respond to messages.
