Search results for

Standard & Poor's has hired Ellen Collins as senior collateralized debt obligation analyst for its CDO manager focus group, which is headed by Mark Gaw, associate director. Collins joins as associate director. She started last Thursday. The position is newly created as the group is expanding (BW, 10/13). Gaw says the addition of Collins brings the number of analysts who work under his supervision to three. He says that he will be adding a fourth by the end of this quarter. The group provides reports on CDO collateral manager's performance relative to their peers.

Levels for Tesoro Petroleum Corp.'s bank debt ticked up in the secondary loan market last week as the paper rose from the low 90s into the 95-97 range. Traders said no paper changed hands. One trader suggested the name was climbing on the back of Premcor, a St. Louis-based company that is currently pursuing an acquisition of the Williams Company's Memphis refinery. In addition, crack spreads have held their ground, he added. Tesoro's $1.275 billion credit facility is led by Lehman Brothers. Calls to Sharon Layman, Tesoro v.p. and treasurer, were not returned by press time.

Accounting experts and collateralized debt obligation analysts say low interest rates and an arcane accounting rule will prevent the number of CDO write-downs from ballooning. They say that even with the avalanche of downgrades affecting the CDO collateral, low interest rates support high valuations on the CDO bond prices. Low interest rates also provide accounting relief as they increase the price of other fixed-income instruments. Since CDO performance is booked on a net basis, losses in CDOs may be offset by profits on other bonds in a portfolio and never appear on the books. This is reinforced by the Emerging Issues Task Force rule 99-20, governing CDO write-downs, which analysts say, leaves a lot of room for interpretation. Finally, the lack of transparency in the CDO secondary market allows investors to avoid booking their CDO performances as losses, as they inflate the market value of their CDO notes.

The Loan Syndications and Trading Association elected its 2003 board of directors and board officers at its annual meeting last week. Glenn Stewart, managing director and head of loan syndicate for Banc of America Securities is the new chairman, whileCredit Suisse First Boston'sDon Pollard, managing director and head of loan syndicate, is the vice chairman. Stewart replaces Linda Bammann, chief risk officer ofBank One. Mike McAdams, President and CIO of Four Corners Capital Management, was last year's vice chair.

Ivy Asset Management plans to ramp up and have its $150-200 million collateralized fund obligation ready to price in March, a few months behind schedule, according to a collateralized debt obligation market participant. The deal, originally slated for pricing in the fourth quarter, was delayed because Ivy, the collateral manager, was busy putting together two protected principal notes, he says. John Rogers, president of the Garden City, N.Y.-asset management firm, declined to comment. Wachovia Securities will underwrite the deal, which is backed by hedge fund-of-funds. Tom Wickwire, the head of Wachovia's credit structured product group in Charlotte, did not return calls.

Oak Hill Advisors is ramping up a new $400 million collateralized loan obligation called Oak Hill Credit Partners II. The vehicle is said to be close to pricing with Deutsche Bank as the underwriter. The vehicle will contain up to 70% loans with the balance in a bond bucket, according to a source familiar with the transaction. One issue the vehicle is now facing is ramping up while collateral is scarce, added a portfolio manager. "Allocations are tough right now, a little skinny," she said. The wide spreads over recent months have led to attractive opportunities for equity buyers, an analyst said, leading to a relatively strong pipeline for new CLOs. Two weeks ago, over $100 million of directories names traded, with several market players attributing the boost to large amounts of cash looking for a home (LMW, 1/13).

Olympic Steel closed a new $132 million credit that locks in lower rates than those on its previous $125 million line. "At the time we did the last one, [the steel market] was terrible," said Richard Marabito, cfo and treasurer, explaining the rough market conditions for the industry when the previous three-year agreement was signed in June 2001. He explained that the new three-year deal lowered the borrowing rate by about 175 basis points.

Fortis Investment Management is starting an emerging markets collateralized bond obligation program. The firm has decided to create this new line of business to build off of its first emerging market CBO launched late last year and to capitalize on the excellent returns proffered by emerging market sovereign debt lately, says Raphael Marechal, senior emerging market fund manager in Paris. The firm plans to bring another deal this year, but will wait until there are good arbitrage opportunities in the market.

London-based Henderson Global Investors is warehousing leveraged loans for its first collateralized loan obligation. Dominic Powell, director of fixed interest and credit, said the firm is focusing on leveraged loans because the asset class is stable and one of the firm's core competencies. The deal is called Aquilae and will be about EUR 300 million. Goldman Sachs is underwriting the deal. European managers are increasingly turning to CLOs after the poor performance of bonds have made it virtually impossible to issue a CBO (LMW, 11/18).

Westmoreland Capital Management is prepping its first ever collateralized debt obligation. It should price in the first quarter, according to a CDO market participant. The firm is a brand new CDO shop based in Richmond, Va. It was created last year by several senior CDO bankers from J.P. Morgan Securities, Prudential Securities and First Union Capital Markets. Carter Rise, founding partner, reached at the firm's New York office, declined to comment.

WestLB has offered Reliant Resources a three-month extension on its chunk of the Houston power player's $2.9 billion bridge facility that matures Feb. 19-a move characterized by bankers as unusual and perhaps divisive given that the bank isn't a lead on the deal. One lender says the move suggests a breaking of ranks between the agent banks that are conducting negotiations with Reliant and more junior members of the lending syndicate. WestLB officials declined comment and PFR was unable to discover the German bank's exposure to the deal.

Japan Ford's Japanese captive finance company Primus Financial Services is returning to the market in February with a ¥61bn securitisation of auto loan receivables. Nikko Salomon Smith Barney is arranging the deal.