Securitization People and Markets

Some cable/media analysts say Comcast's bid for AT&T's cable business last week is a strong move for Comcast, which they feel is a well-managed company with lots of experience running cable operations. Comcast's 6.74% notes of '11 widened 10-15 basis points on news of the bid, and the analysts say investors should buy Comcast paper on that weakness.

Barclays Capital has hired Mark Pibl, Institutional Investor's top-ranked energy analyst last year, from Merrill Lynch, to lead U.S. investment grade research. The hire is the latest stage in Barclays' effort to build up its U.S. credit business, according to John Stathis, managing director and head of global market sales. He says Pibl will now lead a search for additional talent in the financial, utility, and industrial sectors (BW, 6/18). Pibl, who is expected to start today, fills a position vacant since the departure of Shawn Burke earlier this year.

Mike Hyland has taken over as head of high-yield research at Bear Stearns, according to BW sister publication TeleTech Financing Week. Hyland, who joins from Invesco Funds, is taking over for Paul Greenberg, who announced his resignation about two weeks ago (BW, 7/2). Greenberg left the firm to start a hedge fund. Hyland will report to Warren Spector, the head of Bear Stearn's fixed-income division. Calls to Spector and Hyland were not returned at press time. A spokeswoman for Invesco did not return calls at press time.

Allianz, the giant German insurer and money manager, has promoted PIMCO Chief Investment Officer Bill Thompson and Dresdner RCM Global Investors CIO Bill Price to be head of global fixed-income and CIO of the Americas, respectively, for Allianz Asset Management, according to BW sister publication Money Management Letter. The duo will report to Munich-based Joachim Faber and Udo Frank.

Bondholders of "cusp" credits--those teetering on the lowest rungs of investment grade--are increasingly getting stung when such companies have to renegotiate credit facilities with commercial banks. Bondholders often find themselves pushed further below the commercial banks in the capital structure as banks demand collateral, or stricter covenants as part of a refinancing package. In other situations, banks are extending loans contingent on the completion of a bond deal if the deal does not get done, making a company a serious default risk. Refinancing difficulties at IMC Global (Ba2/B+) resulted in a four-notch downgrade from Standard & Poor's, sending the 73/8% of '18 down from $77 on May 2 to $56 on May 4. More recently, the agency downgraded U.S. Industries (Ba2/CCC+) two notches, driving bids on the71/8% of '03 to 77 last week, down from 92 before the downgrade. Market pros expect the trend to continue and say investors need to be on alert.

Deutsche Bank hiredTed Hsueh, a former Merrill Lynch ABS banker, as v.p.for its asset-backed group's home equity division in New York. He will report to Nita Cherry, managing director and Peter Cerwin, director, who both report to the U.S. head of the asset securitization group, Richard D'Albert. Hsueh will replace former v.p. Lisa McLean, who is no longer with the bank.

John Stark, a longtime creditor committee presence as head of distressed investments at PPM America, has started Water Tower Capital LLC to advise creditor committee's with their workout plans. Stark, whose firm just received its first mandate when it was appointed as an adviser to the workout group of Finova corp., says that the outlook for distressed advisory has never been brighter, given the amount of creditors that have suddenly found themselves involved in bankruptcy proceedings. One distressed investor who has worked with Stark before reasons that with the increased defaults in telecom and utilities, two areas where investors were explicitly not making distressed bets, a premium will be placed on having a creditor committee adviser with no stake in the resolution.

Moody's Investors Service predicts the high-yield default rate will reach 9.5% by the end of the year, a nearly 67% increase over last year, and Standard & Poor's sees a default rate of over 8% by the end of this year. Furthermore, Moody's says defaults will continue rising into 2002 on the way to peaking in March at 10.1%. David Hamilton, a Moody's risk management analyst, says several factors contribute to the agency's forecast. He says Moody's anticipates the summer will be quiet for speculative grade defaults, but will be followed by a surge in defaults toward the end of the year--a pattern similar to last year when most defaults occurred at year-end. In 2000, the default rate hit 5.7%. Moody's had predicted it would come in at 6%. Diane Vazza, high-yield analyst at S&P, said "We're starting to get some positive economic figures that support the argument for a peak by the end of this year." As of the end of the first quarter, defaults were running at just over 6%, Vazza said.

UBS Warburg's longtime fixed-income senior economist Jeff Palma has given up yield curve watching and data forecasting to join his firm's nascent global asset-allocation group. Palma, who is part of a two-person group currently headed by Larry Hathaway, will be responsible for making asset-allocation calls on global bonds and equities. He says that he has been concentrating on analyzing relative value fixed-income ideas, given his bond background. Jim O'Sullivan, who recently joined the U.S. economics group fromJ.P. Morgan, will assume his senior U.S. economist duties. O'Sullivan reports to Maury Harris, chief U.S. economist.