Goldman Sachs has reconfigured its London-based collateralized debt obligation group. The firm has split its synthetic and cash CDO teams and brought the cash business into the same group with principal finance and securitization, says an industry official. Goldman appears to be the first firm to split the cash and synthetic CDO businesses apart. The synthetic CDO group is now a stand-alone entity.
A year and a half ago, Goldman merged its cash and synthetic groups--as had been the industry-wide trend. However, since then, Goldman's synthetic business has grown rapidly and the cash side has declined somewhat, says the industry official. Accordingly, the decision was taken to focus on synthetic deals and bring the cash business into the securitization and principal finance group. Splitting the two groups at this time was the best way to achieve this, says the official.
CDO bankers at rival firms say Goldman is phasing out the cash CDO business completely. However, a Goldman spokeswoman denies this is the case and says the firm has a pipeline of cash deals.
The entire CDO team had been headed by Alastair Borthwick, managing director. Borthwick now heads the cash CDO business and is working on principal finance and securitizations as well. He reports to Peter Cirenza, partner and managing director in the principal finance group. The synthetic CDO team now reports to Pablo Salame, head of credit trading in London.