SG Cowen is releasing two high-yield bond analysts as part of a move to end efforts to underwrite high-yield credits in the aerospace, consumer products and energy sectors. A senior official in New York says the action is being taken because the firm has not been able to develop high-yield bond issuance from its existing commercial lending relationships in these sectors. The two set to leave are Paul Shaum, the head of the six-person junk research team, who covers aerospace and consumer products companies, and Gloria Holzman, who covers energy. The senior official says that as part of this effort, the firm will unwind its loan portfolio in these sectors, which was valued at approximately $1 billion.
Shaum, when reached at his office, declined comment. Holzman, who did junk energy stints at Goldman Sachs and Morgan Stanley prior to joining SG Cowen, says that she is looking to remain in the high-yield business on either the buy- or sellside.
Société Générale executives in Paris see little profitability in lending to these industries, nor any long-term opportunity to develop deep ties with frequent high-yield issuers in these fields. The New York bond pro says the high-yield business model will continue to center around the "core areas" of telecom, lodging/gaming, technology and healthcare, where the firm has long-standing commercial and corporate finance relationships, as well as having experienced junk analysts in place. The official says the firm will use junk trading and sales head Neil Parekh as acting research department head until another chief is appointed.