Merrill Lynch has appointed Doug Mallach, head of U.S. fixed-income sales, to lead its new group that is charged with shedding underperforming or troubled assets. Mallach is forming a team to deal with collateralized debt obligations and other assets hammered by the subprime meltdown. The team will decide what to do with the assets, a source says.
Global CDO issuance fell 94% in the first quarter, according to SIFMA data. Issuance in currencies other than the dollar and the euro was virtually nonexistent. The latest issue of SIFMA's Research Quarterly also showed a 39.8% decline in ABS issuance.
Regulators around the world can see several gaps after reviewing the subprime-mortgage bust, Securities and Exchange Commission Chairman Christopher Cox said. The problem spread into securities markets only after becoming a horrible problem for banks, Cox added. The SEC has been probing whether credit-ratings agencies veered away from previous standards to publish higher ratings for mortgage-backed securities when the sector boomed.
Contracts for credit default swaps and other credit derivatives climbed as financial markets collapsed into turmoil during the second half of 2007, the Bank for International Settlements said. CDS contracts increased by more than a third, growth that topped all other over-the-counter derivatives.
The global marketplace has advanced dramatically in the past 25 years, writes Peter Weinberg, founding partner of Perella Weinberg Partners and former chief executive officer of Goldman Sachs International, but an aversion to sovereign-wealth funds by U.S. and European governments, companies and consumers threatens to set back globalization. Instead, Western companies, and by extension their governments and citizens, should embrace and reward the interest of these funds.