Securitization People and Markets

Credit Suisse First Boston has rejiggered the duties of some of its investment-grade fixed-income analysts. Thierry Perrein, director and real estate investment trusts analyst, has taken over insurance industry coverage from Kevin Morley, managing director and manufacturing analyst. Morley will now focus exclusively on manufacturing, as spread widening in the sector means that it requires more attention, according to Tony Smith, managing director and head of U.S. corporate bond research at CSFB. Perrein will continue to cover REITs.

Louise Purtle resigned last Tuesday from her job as a director and U.S. corporate credit strategist at Deutsche Bank, and will join Creditsights, an independent fixed-income research shop, on March 11. She will report to Glenn Reynolds, ceo, and Peter Petas, head of global strategy. "This adds a seasoned credit pro in corporate strategy who has strong relationships [with potential clients] in Europe, Asia, Australia and of course the U.S.," says Petas. Purtle will focus on corporate bond strategy, while Petas concentrates on convertible bonds and emerging markets research.

London-based high-yield bankers are bracing for a slew of layoffs from European investment banks after the recent spurt of debt restructuring is--successfully or unsuccessfully--completed, according to BW sister publication TeleTech Financing Week. Bankers declined to name banks that they thought would spearhead this trend.

Merrill Lynch's London-based head of high-yield sales, Tim Davenport, has returned to New York to head the firm's corporate derivatives marketing effort. Duncan Riefler, Davenport's second in command, will become the new high-yield sales head, according to a firm official. A junior salesperson will be added to the team, now just four-strong, says the official. In addition, Mark Barry, another high-yield salesman, will begin to cover hedge fund clients as Merrill endeavours to pitch distressed European corporate bonds to U.S.-based hedge funds and European equity funds, adds the official.

Tensions revealed last week between France Telecom and Mobilcom, a German company in which it owns a 28.5% stake, will continue to push FT's spreads wider as the two companies continue to duke out their problems through the media, say London-based telecom analysts. "It smells, and in the coming weeks, it's going to get worse," says Simon Surtees, telecom analyst at Bear Stearns. Surtees reckons spreads on FT bonds could widen to as much as 400 to 500 basis points over swaps before the Mobilcom problem is resolved. At some point FT bonds will be a screaming buy, he adds, but it is anyone's guess as to when that will be. As of last Wednesday, FT's 53/4% of '04 was trading at 234 over swaps, compared to Poland's TPSA, of which FT is a part owner, which has a 6 1/8% of '04 which was trading at 217 over.

Morgan Stanley has expanded the role of its global credit research group, and named Ryan Marshall, managing director and former global head of securitized products research, as global director of fixed-income credit research. Marshall replaces Stephen Penwell, managing director and the new head of North American credit sales (BW, 1/28). By combining research across all the different credit markets within fixed-income, the firm hopes to offer a wider range of options to issuers and investors, Penwell says. He adds that no one has been released as a result of the changes.

U.S. and European hedge funds, both start-ups and established, are starting to make forays into the European high-yield and distressed-debt markets, according to London-based salesmen. "Hedge funds have been monitoring the market for the past four years and are now beginning to step in," says a salesman at Deutsche Bank. "The equity arb desk here has passed me at least 10 new [accounts]. There is undoubtedly a significant increase in interest in European high-yield," adds a salesman at Credit Suisse First Boston. Some are established hedge funds entering the distressed market for the first time and others are start-ups, he says.

High-yield media analysts say investors should not jump to add exposure to television and cable broadcasters following last week's decision by a U.S. Appeals court, which is widely expected to encourage industry consolidation. Steve Schutzman, Salomon Smith Barney media analyst and anInstitutional Investor 2001 All-America Fixed-Income Team second-teamer, suggests investors take gains on Young Broadcasting 10% notes of '11 (B3/B-) and the Sinclair Broadcast Group 9% notes of '07 (B2/B). The Young paper was bid at 97.5 last Wednesday, while Sinclair's bonds were bid at 103. Both companies are candidates for consolidation, but Schutzman says that asset sales do not always benefit bondholders. Young, for example, will use only a fraction of the proceeds from a recent asset sale to reduce leverage. Shutzman says that while junk broadcasters continue to benefit from defensiveness on the part of portfolio managers, current bond prices are higher than huge debt levels and high fixed costs would seem to justify. He declines comment on how low the bonds may trade.

Trading started slow last Tuesday after the holiday, but volume was normal by mid-week. It was a soft week overall, though energy, healthcare, gaming and supermarkets were well bid. Here was other action.