Securitization People and Markets

Three managers of a distressed debt fund at Lazard Frères left the firm last week for the Quadrangle Group, a New York-based $1.1 billion private equity firm run by Steven Rattner, the high-profile former Lazard deputy chairman. Lazard will cease operation of the fund, according to Joele Frank, an outside spokeswoman. "As a result of these abrupt departures, we have concluded that the best interests of investors require that we begin an orderly winding down of the fund," she said.

Lehman Brothers is establishing a London-based European asset-backed research team. Krishna Prasad, who has been covering U.S. ABS in New York for five years, will be heading the team and plans to add two or three analysts. He says it has not been decided if the new additions will be internal or external hires. Previously, Lehman had been covering European ABS from the U.S., but Prasad says that the business has grown to a size where it merits its own research effort on the ground. Prasad, who had been covering European ABS from New York, in addition to his U.S. coverage, will assume his new role this week.

Bear Stearns has laid off at least nine analysts in its U.S. high-grade and high-yield research groups recently, according to firm officials. The layoffs come on the heels of reductions in European credit research (BW, 1/7).

ABN Amro is creating a London-based dedicated collateralized debt obligation group, and is looking to set up a commercial mortgage-backed group in New York, says John Mullen, global head of ABS. The firm is also looking to hire a new head of CDOs in London, a position that has been vacant since Mark Moffat joined Bear Stearns last year, he says. The new CDO group, which will be staffed by internal and external hires, is a response to the increased business in the European CDO market. As for the CMBS group, Mullen says the firm plans to hire a total of eight to 10 traders, salesmen, originator to the New York office as it ramps up its U.S. business to include large loans and floating rate loans. Mullen joined ABN last month from J.P. Morgan in New York, where he was a managing director in the investment banking division. He will relocate to London.

Stanley O'Neal, Merrill Lynch's president and coo, is recruiting Jack Mann to co-head leveraged finance and revive its struggling high-yield operation. Mann is currently manager of a leveraged buyout fund for the Carlyle Group. "No ink has been signed yet, but it's just a matter of paperwork," says one senior fixed-income official close to the situation. "I'm surprised they haven't named him already," says another official who spoke to Mann some 10 days ago. He speculates that the delay may suggest that Mann has had second thoughts about running the group, which has been subject to severe cutbacks and the departure of several senior executives (BW, 12/16, 2/11). Mann did not return several calls.

The Ratings Fallout From Enron

Sherri Andrews, head of high-yield research, has left BNP Paribas in New York. Rod Dunlap, a senior energy analyst in the high-yield group, who says he was let go from the firm, says Andrews left because she was offered what was essentially a demotion. She would have maintained her coverage of distressed credits, but John Maxwell, gaming analyst, would take over as head of high-yield research, he says. Mark Wisniewski, a firm spokesman, says Andrews left to seek opportunities on the buy-side. He would not comment on why Maxwell replaced Andrews as research head. Andrews could not be reached, and Maxwell did not return calls.

Michael Youngblood, a residential and commercial mortgage-backed securities veteran who headed real estate research at Banc of America Securities, left the firm last week. Reached at his home in Charlotte, N.C., Youngblood says he is evaluating several options, including launching his own firm or joining another, possibly as a sell-side analyst. Youngblood continues that he is going to take several weeks off and evaluate which of the two options seems more feasible. He was a managing director and reported to mortgage group head Pat Augustine.

There was a firmer tone overall last week, with wireless and cable particularly strong. Several new issues were priced, including a $375 million deal for Corus Entertainment. Here was other action: