Merrill Lynch has begun to send credit derivative structurers along with asset-backed bankers when pitching deals to potential issuers. The objective is to provide a one-stop-shop for securitization, since these deals frequently include derivatives, according to a Merrill banker in London. The derivatives team will handle smaller deals, while larger deals will be the purview of the securitization group.
Merrill believes the joint approach will also allow it to pitch more creative securitization options to clients. These could include making illiquid assets liquid, changing a pool of loans into bonds and using derivatives to smooth out cash flows within ABS deals or to simplify highly structured notes. Investment banks generally pitch ABS and derivatives products separately, according to the banker. Crédit Agricole Indosuez will follow the same strategy to offer its clients an integrated approach to financing and risk management.