Securitization People and Markets

Building a high-grade debt originations business has taken center stage at Barclays Capital as the firm is aggressively approaching its rival firms to lure more top talent.Peter Goettler, head of U.S. debt capital markets, said the firm has been making a big hiring push for the past few months as it seeks to expand its presence in the high-grade market in the U.S., according to a story in BW sister publication Corporate Financing Week. The firm has already made a bunch of hires, including Michael Evelyn, managing director, who came from WR Hambrecht; Jim Glascott, managing director, who joins from from Morgan Stanley, and Kottur Vasanth, director, who moves over from Deutsche Bank.

XL Capital Assurance, the New York-based asset-backed securities guarantor, has hired Gregory King as a director in its structured investments group, in a newly created position. King will report to David Czerniecki, senior managing director of structured investment products. King says he will be responsible for structuring securitization transactions using new structures and non-traditional financial guarantee wraps. Czerniecki says he expects further growth in the structured investment department at XL, adding that his department will consider adding staff in several months. With King, the department now comprises five people.

The Royal Bank of Scotland is preparing to break into the French corporate bond market this year and hopes to lead manage its first public sterling-denominated and U.S. dollar-denominated private placement deals for French companies in the first half. Donald Bryden, Paris-based director general of RBS' French operations, says the firm will start to develop its euro-denominated business in the second half of this year. RBS is also in the process of hiring two senior bankers for relationship management and origination. Bryden says the new hires should be on board in the next six weeks or so. Currently, RBS has one origination banker working in Paris, Arnaud Nicoli.

Investment banks without ties to commercial banks held their own against those firms that usually benefit from the commercial banking relationships of their parent companies. In what was a record year for investment-grade bond underwriting business, David Hendler, an analyst at independent fixed-income research firmCreditsights, argues that the dealer subsidiaries of large commercial banks, in particular Banc of America Securities, should not be so quick to claim victory in their battle to win underwriting business.

Bear Stearns has eliminated six fixed-income analysts from its London-based European research team, saysJohn Knight, a firm spokesman, declining further comment. Three of the layoffs were made in high-grade research while the rest were made in high-yield. Among the analysts let go was Graham Neilson, fixed-income strategist. His responsibilities have been assumed by Alexander Popov, a junior analyst. Philip Crate, head of European fixed-income research, was on holiday and could not be reached for comment.

Deutsche Bank has hired Chris Johnson for the newly created position of senior leveraged finance originator, according to firm spokesman Ted Meyer. Johnson was formerly chairman of Merrill Lynch's global leveraged finance group, where he had spent 14 years within its high-yield unit. He resigned in early December as Merrill has undergone a sweeping reorganization of its once prominent operation (BW, 12/17). Johnson will be a managing director, although his reporting lines are in the process of being finalized, according to Meyer, who speculates that he will most likely fall under the command of global leveraged and structured finance chief Rich Byrnes. Meyer says his role will be to expand DB's high-yield client roster. He started several days before Christmas. A call to Merrill spokeswoman Jessica Oppenheim was not returned as of press time.

Brian Hannon, a senior high-yield trader, has left Bear Stearns, according to another trader there. A senior high-yield trader at a rival firm says Hannon was laid off because, though he had been there for several years, he had been there for the shortest tenure among Bear Stearns' senior high-yield traders. He says Hannon traded cable, energy and some telecom credits. Hannon, who worked at Scotia Capital Markets prior to joining Bear Stearns, could not be reached. Art DeGaetano, head high-yield trader at Bear Stearns, declined comment.

Oaktree Capital Management, one of the most well-known high-yield and distressed debt money managers in the industry, is considering launching a $500 million to $2 billion add-on fund to its $2.5 billion distressed debt fund, according to BW sister publication Money Management Letter. The fund would consist of a mix of loan and bond assets from issuers that have tanked. Howard Marks, chairman of the Los Angeles-based firm, says it is considering the move because of the recent uptick in defaults and bankruptcy filings due to the weak economy. The first fund's closing was on Sept. 28 with $1.5 billion, and its second closing will be Dec. 20 with an additional $1 billion. About 20% of the existing assets in the fund come from foundations and endowments, says Marks. The minimum investment would be $3 million and the annual management fee would be 1%.

Westar Financial Services, a prime auto lease securitization originator and servicer with $625 million worth of bonds outstanding, is looking for an acquirer. "We are talking to a few people [about] selling our portfolio, our origination and servicing platform, or the company itself," says Bob Christensen, president and ceo. Westar's portfolio represents 25,000 accounts totalling $625 million. No pricing has been set for the acquisition, he says. Christensen says his firm's difficulties started last month, when Bank One terminated its obligation to make further loans to Westar under a credit facility because Westar failed to complete a term asset-backed transaction in the given timeframe. Asked whether he was going to sue Bank One, Christensen would only say that, "Westar has sought counsel and will take the steps necessary to protect the value of its assets and of the enterprise itself." Other factors have contributed to delay the securitization attempt, he says, such as the effect of Sept. 11 on the capital markets and insurance industry. Christensen says Bank One's decision resulted in the end of Westar's origination business because the company is deprived of its source of funding. Thomas Kelly, a Bank One spokesman, declined comment, citing client confidentiality.