Search results for

Barclays Capital Asset Management reportedly is warehousing assets for its second CDO composed of U.S. leveraged loans. The vehicle, called Venture CDO II, is slated to total $300 million and will consist of at least 90% loans and a maximum 10% bucket of high-yield bonds. A spokeswoman for Barclays declined to comment on the firm's plans, and bankers at Credit Suisse First Boston, which has been tapped to underwrite the notes, did not return calls for comment.

The recent downgrade of British Energy, which in turn prompted downgrades for three static collateralized obligations, has some CDO bankers even more wary of static style deals. These same types of deals have been hit before by events surrounding Enron, WorldCom, Tyco, Qwest and the like, says one CDO expert of the recent CDO downgrades.

Canyon Capital Advisors, a Beverly Hills-based asset manager, is readying Canyon Capital CBO, a $375 million deal that will be its first collateralized debt obligation of the year, and its second overall, says a CDO market official. J.P. Morgan Securities is underwriting the notes, which are set to price at the end of the month or early November. A mix of 75% high-yield bonds and 25% leveraged loans back the notes. The collateral pool has a single-B weighted rating average. No price talk levels were available at press time last Thursday. This deal comes at a time when high-yield CDO issuance has slowed down significantly, due to investors' skittishness on high-yield bonds; but with wider high-yield spreads, those deals are attractive from a structurer's standpoint as they offer cheap collateral and good arbitrage, notes a CDO analyst (BW, 9/9).

Standard & Poor's has lowered Lucent Technologies' corporate credit rating from B to B- and placed the company on watch with negative implications, following the announcements of a $1 billion restructuring charge, a cancelled $1.5 billion revolver and downsizing plans. The downgrade also reflects S&P's concern over the Murray Hill, N.J., communications supplier's ability to raise positive cash flow over the coming year due to the continued industry slump. "The [communications] industry is extremely challenged," said S&P analystBruce Hyman, adding that he doesn't foresee any significant revival for Lucent until 2004.

With credit deteriorating, collateral managers of collateralized debt obligations are pushing for extended ramp-up times for their deals. Scott Roberts, president of Deerfield Capital Management in Chicago, a collateral manager that has originated 13 CDOs totaling $6.5 billion, says that, "having the flexibility to have the longest ramp-up as possible is crucial" because the manager needs to buy the best possible bonds for the deal. He adds that, "If we are not comfortable with the ramp-up period, we won't do a deal with a dealer."

European collateralized debt obligation bankers are laboring to wrap up deals before year-end, as market experts warn only a finite number of deals in the bulging pipeline will get done. Market participants attribute the difficult market to several factors: banks having to sell down large secondary positions, monoline wrap providers curtailing policy writing activities and investors becoming even more risk averse.

There are at least 12 European commercial mortgage-backed securitizations in the pipeline that issuers hope to complete by year-end, say various market participants. The pipeline has grown, because CMBS are becoming easier to execute on the Continent, the market is maturing and investors are looking for diversification. The upcoming deals include a few synthetic deals from German issuers, including one first-time issuer, a few more European Loan Conduit deals from Morgan Stanley, a deal securitizing non-performing commercial mortgages from Italy and at least two single building transactions, say CMBS bankers and analysts.

Four Corners Capital Management, the asset management company headed by loan veteran Michael McAdams, is preparing to price the notes for its debut $400 million collateralized loan obligation, called Mondrian CDO I, after a lengthy period in the pipeline. "We started warehousing in March, and we expect to price in the next 10 days," McAdams told Loan Market Week late last week. Four Corners has purchased about $150 million in assets for the vehicle, which will consist completely of leveraged loans, and is set to buy the balance once the notes are priced.

Genesis Health Ventures held a conference call on Oct. 11 to explain the difference between itself and competitor Kindred Healthcare, which recently recorded approximately $55 million in additional costs for professional liability claims above its normal provision. The charge, caused by the dramatic increase in professional liability costs in Florida, led to concerns among investors that the sector as a whole could be affected, tainting competitors such as Genesis and Beverly Enterprises, according to investors.

Deutsche Bank was rumored to have completed a $15 million trade of GenTek in the mid-50s last week after the company filed for Chapter 11 bankruptcy protection on Oct. 11. The company has stated that it will not seek a debtor-in-possession facility because, with $110 million in cash on hand and cash flow from continuing operations, it has enough money to fund operations and obligations to customers, vendors and employees. The market for the bank debt was quoted in the high 50s before the filing. Officials at Deutsche Bank declined to comment.

High-yield was up on the week through mid-Thursday, but there was no dramatic activity, according to Jon Budish, a trader at Jefferies & Co. "No money. A lot of short covering. No calendar. People don't have cash. You'd expect a rally with the stock market, but unfortunately it's just ebbs and flows," he says. Another trader says benchmark names such as Nextel and Charter were modestly improved, while technology issues were better in sympathy with a strong Nasdaq Stock Market. Here is other action.

Hyperion Capital Management is seeking a generalist corporate analyst for its investment-grade portfolio. The new hire will report to John Dolan, cio, and will analyze corporate credits for the $1.6 billion investment-grade portfolio, which has a single-A average rating. The position is a newly created one, says Dolan. He adds that with the new hire, eight corporate analysts will be assisting the two portfolio managers that manage the firm's corporate bond portfolio. Dolan says that after this hire, he is not anticipating adding to the group for the balance of the year.