Banc of America Securities has set up a new group to structure collateralized debt obligations and hired Michael Llodra, director at Citigroup, to spearhead the effort. He started last week at BofA of New York and runs a new asset-backed CDO platform for the bank along with Justin Dash, another CDO banker at BofA, according to someone familiar with the plans. Llodra confirmed his move and that he reports to Mike McLaughlin, global head of the structured securities group in London, declining further comment. McLaughlin was unable to comment by press time.
BofA is setting up an ABS CDO platform now because the sector has blossomed into the largest part of the market in recent years after experiencing ratings downgrades early in its development. The firm is looking to be a league table force at some point but recognizes that, at this stage in the cycle, it is unlikely to make a major move up the ladder immediately. BofA will seek to structure deals that will buy high-grade and mezzanine securities and will put its balance sheet to work for managers in the ramp-up period.
"They are number 12 now, so they can only go up," one rival quipped, referring to BofA's CDO league table positioning (BofA is actually 8th in Thomson Financial's U.S. CDO league tables as of April 8; the standings exclude synthetic transactions).
The strategy is part of a broader commitment by the bank, announced last year, to invest more than $600 million in building up various parts of its fixed-income business, according to a firm official in Charlotte.
Janice Warne, co-head of the CDO group at Citigroup, did not return a call by press time regarding Llodra and whether he will be replaced.
