Securitization People and Markets

Democrat John Hawke's chances of remaining comptroller of the currency under a Republican White House may have improved--at least in the short run, said banking industry sources rooting for him to be kept on. Hawke, like other heads of sub-agencies under the Treasury Department, has had a one-on-one meeting with new GOP Secretary Paul O'Neill and outsiders are counting on that session to have worked in Hawke's favor. Before this Feb. 23 encounter Hawke and other O'Neill subordinates met with the secretary as a group. An OCC spokesman confirmed the meetings occurred.

Only in Bondland would NERDS mean Not Ever Really Dead Sectors. The revenge of the NERDS, in Credit Suisse First Boston research language, is the fact old economy businesses are providing more upside to investors than new economy bonds. "We always try to do something original with our research," says CSFB high-grade credit strategy head David Goldman, adding that he just got off the phone ordering propeller beanies with the CSFB logo for an upcoming conference. "Just think of them as high-tech yamulkes," he quips.

The European Union has given a carve out from a new withholding tax for issuers that add to benchmark issues until March 1, 2002, without being subject to the tax. The granfathering arrangement has quelled strong concerns over the fungibility of new tranches, or re-openings tied to pre-March 1, 2001 issues, but the announcement actually came after the tax had taken effect. "It isn't like they waited for the 11th hour, it was more like they corrected it sometime after midnight," says Crispin Southgate, strategist at Merrill Lynch in London.

Mark Mahoney this week joins Wachovia Corp. as head of capital markets after leaving his post as president of First Union Institutional Debt Markets. He will report to John McLean, senior executive v.p. in charge of corporates services. He declined to discuss specifics regarding any expansion plans for the group. Currently, there are 450 people working in capital markets at the bank, but Mahoney would not say whether or not he would be looking to hire more. In his new position, Mahoney will be overseeing loan syndication and trading, in addition to debt and equity businesses. He will be replacing Doug Williams and J. Peter Peyton, who were co-heads of the group and are moving into risk management and merchant banking,

Ferdie Masucci, a managing director and 16-year veteran of Morgan Stanley Dean Witter's New York corporate bond trading efforts, has left the firm and joined HSBC in New York to head up capital markets aspects of its corporate bond effort. An HSBC spokeswoman says Masucci, who started Monday last week, helms the U.S. corporate bond trading, research, sales and syndicate operations, and will reports to fixed-income head John Burrus. Masucci did not return repeated calls for comment.

Though spreads on Abbey National Bank benchmark issues tightened towards Lloyds TSB after Lloyds bid for the U.K. mortgage bank, last week's revelation of why the deal was referred to competition authorities will force spreads wider again, according to City players. Larissa Knepper, research analyst at Barclays Capital in London, says, "We've seen Abbey spreads converging close to Lloyds up until the referral [to the Competition Commission]. Since then spreads have remained static, but I believe Abbey spreads will drift wider in the next few weeks." The Office of Fair Trading revealed its rationale on Thursday for referring the merger to the Commission for examination, citing heavy consolidation in the area of current accounts. The deal is on hold until the investigation is concluded.

A last-minute interpolation into the legislative history of the Gramm-Leach-Bliley Act by Rep.Jim Leach (R-Iowa) is creating another hassle between financial institutions and the Federal Reserve over what financial holding companies are allowed to do. In recent days, the Fed has been getting sharply worded complaints because the central bank wants to put an aggregate cap of only five percent of tier one capital on certain electronic activities it proposes allowing FHC's to do as "complementary" to financial.

Howard Goldberg, an Institutional Investor ranked high-yield analyst at J.P. Morgan, has recently joined US Bancorp's Libra Investments as a high-yield generalist. He left J.P. Morgan soon after it consummated its merger with Chase Manhattan. Goldberg, who has been on the junk sell-side since 1985, and who worked at Goldman Sachs prior to joining Morgan, will broaden his coverage away from retailers and supermarkets, and into consumer products, gaming/lodging and several other fields. He notes that at a full service boutique like Libra, "everybody does a little bit of everything, and my coverage will reflect that." He will report to Randy Masel, one of the firm's directors since, given the relatively small size of the firm's research effort, no one holds the title of research chief.

Merrill Lynch has revised its forecast for the 2001 junk default rate to 9.2%, bringing it closer to the 9.5% prediction of Moody's Investors Service, which some had considered a radical outlier. "It is just coincidental that the number has come closer to Moody's figure," says Martin Fridson, Merrill Lynch's chief high- yield strategist. "Conditions have worsened--the reality has come in line with Moody's. It isn't that Moody's has finally come into line with reality."