Securitization People and Markets

Countrywide Securities has moved Jim Griffin from mortgage analyst to the position of secondary trader in its asset-backed securities and mortgages desk. Jeff Staab, senior v.p. of home loan trading, says Griffin will report to both Staab and Kevin Doyle, senior v.p. ABS trading. Prior to his promotion, Griffin reported to Anand Bhattacharya, head of fixed-income research, says Staab.

Bonds of high-yield wireless companies traded up last week after AT&T Wireless (Baa1/BBB) announced that it would acquire affiliate TeleCorp PCS. Bids on TeleCorp 10.625% notes of '10 (formerly B3) rose from 93.5 to 114. Bids on other wireless affiliates of AT&T and Sprint, such as AirGate PCS (Caa1/CCC), Triton PCS (B2/B-) and Alamosa PCS (Caa1/CCC) rose two to four points each, in what analysts attribute to investor expectation of further acquisitions. But, Robin Lochner, wireless analyst at Deutsche Banc Alex. Brown, says that is a mistake. "Other than Dobson Communications, I don't think you can count on any near-term M&A activity in the sector." Bids on Dobson's 9.5% notes of '09 (B2/B) moved up five points, to 97.5.

Gaming analysts and investors say there is room for further tightening on bonds of gaming companies that depend on air travel for a large percentage of their clientele, chiefly those operating in Las Vegas. Many had thought that the casinos would suffer as a result of decreased air traffic into Las Vegas (BW, 9/24). Though the whole gaming sector sold off immediately after Sept. 11, Vegas credits were particularly hard hit, trading down by as much as 15 to 20 points. They have since come back, but as of last week were still well short of their August highs. MGM Mirage's 9.75% senior subordinated notes of '07 (Ba1/BB+), which traders see as a benchmark Vegas name, were up to a 101 bid--well off its August level of 109, but much improved from a post-attack low of 90.

The slide in Global Crossing debt continued last week in the wake of the company's Oct. 4 earnings warning and management shuffle. The benchmark long haul communications provider saw bids on its 9.5% senior notes of '09 (Ba2/BB-) sink to 15 last Thursday, down from 21 the previous week. "There have been several downdrafts in the [high-yield wireline telecommunications] sector over the past year, but this latest downdraft since Sept. 11 has been more severe than others, and we think it represents real capitulation," says Trent Spiridellis, analyst at Banc of America Securities. He says "slowing demand for data services, shrinking budgets for capital expenditures, customer churn, soft wholesale demand and the company's general unwillingness to do business with competitive carriers" were among the factors contributing to Global Crossing's earnings miss, and the decline of the sector as a whole.

Corporate bonds from the beleaguered industrial manufacturing sector are being pitched as good total return plays by investment-grade players, who argue that the recent spread pullbacks are overdone, given the income stream diversification in several of these names.

J.P. Morgan Securities is offering each employee released by the company a book titled As You Leave: Your guide to leaving J.P. Morgan Chase. One former senior bond executive declined to directly address whether he found the pamphlet helpful, although he did speculate as to several potentially creative uses for it, such as wiping up spills, keeping drinks off the coffee table or house-training a pet.

High-yield analysts on the buy- and sell-side are focusing their attention on bonds of companies such as Grey Wolf, Grant Prideco, Parker Drilling Company, and Lone Star Technologies, which sell equipment to oil and gas drillers. While there has been weakness throughout the energy sector due to falling oil and gas prices, analysts say equipment providers have seen their bonds hit the hardest.

Merrill Lynch is considering whether to change the rules for its Euro High-Yield Index, capping the weighting of any single issuer at between 5-10%. Behzad Mansouri, v.p. portfolio strategy group, says the question is being investigated because of the potential downgrade to junk status of Dutch telecom operator KPN. Mansouri notes that this is important because a KPN rally would cause high-yield investors benchmarked off the index to significantly underperform the index. He says that with outstanding paper worth roughly $5.96 billion last week, KPN paper would account for 33% of the index. Such a percentage would dwarf the current leader, Marconi, which was still being added to the index but was expected to comprise close to 5%. "There has been a good deal of investor concern about this question," he says."Many of them are limited as to how much they can invest in a single issue."

Barclays Capital has hired Eileen Murphy to develop a global collateralized debt obligation underwriting business. Murphy, the ex-global head of CDOs at Chase Securities, says she will be looking at hiring four to six people as soon as this week, and is considering a few names within Barclays. Within a year, she plans on doubling this number. She hopes to have underwritten Barclays first deal within two months, followed by at least one other transaction six months from now.