Barclays Capital has hired Eileen Murphy to develop a global collateralized debt obligation underwriting business. Murphy, the ex-global head of CDOs at Chase Securities, says she will be looking at hiring four to six people as soon as this week, and is considering a few names within Barclays. Within a year, she plans on doubling this number. She hopes to have underwritten Barclays first deal within two months, followed by at least one other transaction six months from now.
Murphy says Barclays is seeking to get into the business now because the bank has been building up its credit derivatives and asset management business. She adds that Grant Kvalheim, a corporate bond origination specialist who joined the firm last spring from Deutsche Bank as head of credit products, has been pushing the business in this direction.
Murphy started her job last Friday, reporting to Vince Balducci, global head of risk finance, who joined the firm in July fromDeutsche Bank. Balducci did not return calls. Murphy left J.P. Morgan Chase shortly after the merger (BW, 7/2).
Hiring will be focused on getting seasoned CDO bankers. "With all due respect to rating agencies, I need someone to sell the equity as if their lives depend on it. I can't afford to train anyone. I want people ready to hit the ground running." Murphy is seeking to fill three types of slots: equity distribution pros, senior CDO bankers and people with modeling skills. As for deals, she says she'll push for her first underwriting mandate as soon as possible because, "Today is a good time to start. The collateral is 'yieldy' [or cheap] and you just have to focus on finding the right manager." She is not implying that it will be easy, though, admitting that the market is quiet right now. "But people have to invest their money and doing so in a well-structured and well-managed CDO makes sense," she says.
Prior to Murphy's hiring, Barclays did not have the infrastructure to underwrite CDOs, because there was no sellside entity to conduct transactions. Murphy says she intends to work in partnership with Barclays Capital Asset Management's high-yield bond and leveraged-loan capability to boost its new sellside business, a tactic used at other banks such as Credit Suisse First Boston and J.P. Morgan Securities. BCAM has managed one high-yield CDO deal to date, called Blue Eagle, and is working on a second one, a collateralized loan obligation transaction, called Jubilee, according to Elliott Asarnow, who heads the buyside CDO group out of London.
Asked about the chances of success for Murphy in her new job, a former colleague of hers from Chase says that smaller European banks that have tried to get into the lucrative credit derivative business have failed more often than succeeded, the notable exception being Deutsche Bank. But he points out that Murphy has the leadership ability, contacts and product knowledge for the job. Commenting on Barclays' choice, he says that, "Going for someone like Eileen, if anything, is a positive sign that shows that they are committed."