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Goldman Pros To Move Fund Into Managed CDOs

Two senior Goldman Sachs derivatives professionals have joined Cheyne Capital Management, a convertible bond fund manager with USD1.1 billion in assets, to develop its investment grade credit business, particularly through the use of CDOs referenced to both bonds and credit derivatives. David Peacock, executive director and head of portfolio synthetics, and John Weiss, executive director and head of the global correlation book at Goldman in London, have joined as portfolio managers and plan to launch a series of managed CDOs it will issue in partnership with a structuring and distribution agent. Peacock said it will chose its counterparties from among the major international derivatives houses.

Peacock said the CDOs it plans to issue will be USD1 billion or larger as that is the most efficient size in terms of fees. Stuart Fiertz, co-founder in London, said moving into credit derivatives is a natural extension to the business as it has always taken credit risk and has a good track record in cash CBOs.

A head of credit derivatives structuring said Peacock and Weiss are veterans and their arrival at the fund will give it a high profile in the managed CDO market. However, another added that they do not have experience of managing synthetic CDOs and although much of the experience they gained at Goldman will be useful, some investors will demand a track record. Peacock said he managed a portfolio of credit risks at Goldman and these skills are central to fund management.

Peacock and Weiss reported to Robert Heathcote, European head of credit derivatives in London. Heathcote declined comment.

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