Credit Lyonnais is establishing a multi billion-dollar fund that will invest in the high-yield, investment-grade and credit-derivatives markets in the U.S. and Europe. As reported last week on www.bondweek.com, the bank, which does not currently have a significant presence in those areas in the U.S., has hired three investment-grade traders from Deutsche Bank and a senior credit derivatives salesman from Merrill Lynch to manage the fund, according to fixed-income officials with knowledge of the group's plans. The fund, which will launch in May, will start with at least $5 billion dollars to build a global investment platform across all credit products, and will include trading desks in New York and London. The group will report to Omar Abukhadra, global head of credit markets and credit derivatives. He could not be reached. Once the group is in place, it is expected that additional senior hires, including analysts, will be made.
The group will be led by John Botti, who resigned last Tuesday from Deutsche Bank in London, where he was a managing director. The other investment-grade traders leaving Deutsche Bank are New York-based Keith Lombardo, a director, and Bill Mehleissen, assistant v.p. They handed in their resignations last week. Both declined comment. Alex Koundourakis, a v.p. and senior salesman at Merrill who will also join the group, declined comment. He will leave Merrill at a later date. Mark Jicka, head of investment-grade trading at Deutsche Bank, declined comment.Frank Corcoran, head of investment-grade sales at Merrill Lynch, did not return calls. Fixed-income officials compare the new Credit Lyonnais fund to the UBS Principal Finance fund run by UBS Warburg (see story, page 3).