Securitization People and Markets

Ethan Heisler, director of corporate bond research at Salomon Smith Barney, and an Institutional Investor ranked second-teamer, recommend investors seek value in the bonds of double-B and triple-B smaller, off-the-run regional banks such as Sovereign Bancorp (Baa3/BBB-), Dime Bancorp (Ba2/BB) and Riggs National (Ba2/B+). He says the bonds are the safest way to pick up decent yield in the investment-grade corporate sector while avoiding blow-up risk. While there are some indications of investor interest in this paper, many portfolio managers have their doubts.

Fitch has hired Marion Silverman as CDO senior director from Motorola Credit Corporation, the securitization subsidiary of Motorola Inc. Silverman will work out of Fitch's Chicago office, but will report to David Howard, managing director, who heads the CDO rating process for the agency in New York. Howard said the move is part of Fitch's strategy to beef up its CDO division. Silverman will cover a full range of CDO transactions, including new deals, cash flow or synthetic structures. She is a long time asset-backed veteran with years of experience on the issuer's side, says Brian Gordon, another Chicago-based Fitch analyst who also reports to Howard. Calls to Silverman were not returned as of press time.

Barclays Capital has turned its attention to U.S. investment grade research, the latest stage in a widespread effort to build up its U.S. fixed income business. The firm is looking for a head of investment grade research and senior analysts in a number of sectors, particularly industrials, utilities and financials, according to John Stathis, managing director and head of global market sales and research.

The target date for legislation to amend the Gramm-Leach-Bliley Act to permit some bank cross-marketing under GLBA's merchant banking provisions is shortly after Labor Day, industry sources said last week. The competitive handicap the current cross-marketing provisions give banks versus rival insurance companies has some members of the industry resolved to try for Capitol Hill action, even though there is a risk of it backfiring if lawmakers start to make other changes in GLBA that banks don't want.

Brian Walter, a high-yield trader, has left Lehman Brothers to join UBS Warburg's high-yield desk, reporting to Rob Heffes, himself a Lehman alum. Heffes says he hired Walter because he proved his skill during their earlier association at Lehman, as well as to fill a void created when Rich Sullivan went to J.P. Morgan Securities earlier this year. Heffes says he may consider further hires to meet his desk's increased demand as the high-yield market grows.

Nick Casesa, a senior member of Barclays high-yield sales team, left late last month to join BNY Capital Markets in Roseland, N.J. He was at Barclays for just over a year, prior to which he worked at Prudential Securities, according to an industry official. Casesa reports toChris Harrison. Casesa and Harrison declined comment on the move. Jack Flaherty, head of high-yield and investment grade corporate bond trading at Barclays, says Casesa has not yet been replaced.

If theBasel Committee goes ahead with its proposed operational risk-based capital requirements, the Financial Services Roundtable warned in a May 31 comment letter, banks may shift asset management and other activities out of banks and into riskier non-bank affiliates. Furthermore, it said, for another kind of risk, credit risk, bank internal models are "simply not ready for use as a regulatory capital standard."

Commerzbank Securities is continuing the process of reorganizing its New York bond business (BW, 4/15, 11/6/00), this time by consolidating much of the management of its daily bond trading activities in the hands of Ashwin Kumar, the New York-based head of fixed-income proprietary trading, according to fixed-income co-chief Ricardo Pascoe. Pascoe says the move has yet to be announced, pending completion of a standard internal review process. To effect the shift, Pascoe confirms that management of the government and agency trading operations will be carved out from Stephen Creaturo's role as head of fixed-income trading, but he'll retain the rest of his duties. Similarly, Steven Block, the head of interest rate derivative trading in New York, will also have his management mandate shifted over to Kumar. The move will leave Kumar with oversight of all interest-rate derivative, agency, government and proprietary trading activities. Creaturo was traveling last week and could not be reached for comment. Block, when reached at his desk, declined comment. Kumar, who declined comment as well, reports to Pascoe.

Patrick Steiner, head of European high-yield and high-yield telecom research at J.P. Morgan Securities in London, will become a principal at Octagon Credit Investors, according to a J.P. Morgan insider. Octagon is a leveraged loan and high-yield private equity investment firm with some $1.75 billion of assets under management. It is owned by its senior management andJ.P. Morgan Chase & Co., but independently operated. James Ferguson, who is still a senior portfolio manager, founded it in 1994. Calls to Ferguson and Steiner were not returned.