Securitization People and Markets

High-yield analysts and portfolio managers on the buy- and sell-sides expressed disappointment about the recent $150 million bond issue by ResCare (B2/B), a provider of services for mentally handicapped people. The 144a private placement carried a 105/8% coupon and priced at par. Last Thursday it was trading at 101. "It's the first healthcare issue that's not on fire after issuance," says a sell-side analyst, "I'm frankly surprised they got it done at all." One New York buy-side analyst, who did not buy the deal, concurs. "Usually when a new deal breaks, I get 15 Bloombergs [messages from traders indicating buying interest and price levels]. This time, I got two."

Mark Grotevant, one of the co-heads of high-yield research atCredit Suisse First Boston, and the firm's sole remaining senior telecom analyst, plans to leave the firm by year-end. His departure set off a series of rumors across Street high-yield desks, most of which centered on the possibility that Grotevant was a victim of CSFB's high-profile compensation renegotiation activities. Bennett Goodman, CSFB's global head of leveraged finance, dismisses this out of hand, saying that Grotevant is retiring from the sell-side and notes that, "He's going to have a very big bonus, and hopefully he'll go to the buyside and be a client." Sam DeRosa-Farag, global strategist, and Tom Klamka, who covers industrials, had shared high-yield research management responsibilities with Grotevant, and will stay on as co-heads, according to Cristina von Bargen, a firm spokeswoman.

TimesSquare Capital Management has hired Ron Bringewatt as a managing director and portfolio manager. Bringewatt, who joins from American General Investment Management, will manage and expand TimeSquare's high-yield presence. He notes that high-yield assets now total some $2.3 billion of TimesSquare's $44 billion under management. He fills a position that had essentially been vacant for several months after the departure of high-profile junk manager Alan Petersen. Amy Kennedy and Carlton Taylor, who had overseen the firm's high-yield assets on an interim basis, now report to Bringewatt, who in turn reports to Bob Moore, president and ceo. Moore did not return calls. Bringewatt will seek to hire between two and four senior credit analysts in the next three months, and has already begun interviews. He says another critical reason he was brought on is to improve the performance record of collateralized bond obligations that have not fared well since the departure of Petersen.

Investment-grade telecom credits are well-positioned to outperform the rest of the corporate market in 2002, according to two runners-up in the 2001 Institutional Investor All-America Fixed-Income Research Team. Scott Shiffman, telecom analyst at Lehman Brothers, says the sector is at near-historic wides on an overall spread basis relative to the Lehman Brothers investment-grade credit index. Telecom spreads comprised 129% of the index last week, just off their cheapest levels of 132%. Shiffman says fair value is approximately 110%.Doug Colandrea, analyst at Morgan Stanley, expects telecom credits to outperform the broader corporate market by 20 to 30 basis points in 2002, as companies focus on strengthening their balance sheets and producing free cash flow. He advises investors to focus on senior unsecured debt in 10-year maturities, which he says is the most liquid part of the curve.

J.P. Morgan Securities has expanded the scope of responsibilities for three of its asset-backed securities bankers:David Howard, managing director, Brad Dansker, v.p., and Matt Whallen, v.p., according to Andrew Dym and Scott Davidson, the two co-heads of North American ABS. They say the move was done to allow them to spend more time focusing on long-term strategy.