TD Securities has made wholesale changes to its U.S. high-yield business--merging its bond and bank loan units. Additionally, Derrick Herndon has been reassigned from his position as head of debt distribution to a new role managing the firm's $13 billion credit portfolio. Herndon will work with an investment team of what he estimates will grow, through internal moves and some 10 new hires, to 25 people, who will work with another 60 professionals in Canada, Europe and Asia. The portfolio will now be actively managed, where it had been passively held.
The firm will continue to underwrite and distribute bonds and bank debt, according to Herndon. Brendan O'Halloran, who had been running TD's debt syndication business, will now add Herndon's former responsibilities to his brief.
Herndon says the firm made the moves to encourage cross-selling of loans and bonds by TD's sales force. "With the downturn in the credit markets, people are much more focused on capital structure relative value. Given our firm's size, we felt we'd get more bang for the buck by having a sales team with very strong knowledge in both products," he says. TD released just one senior salesperson and one assistant as a result of the changes, according to Herndon.
The decision to move to active management of the firm's loan portfolios is the latest stage of a process begun roughly a year ago in TD's portfolios around the globe, which Herndon estimates at $40 billion. He says it took roughly a year to figure out how the plan would be implemented, which is the reason his role shifted only recently.