| NEW YORK
NEW YORK Jan 15 Aladdin Capital Holdings'
chief investment officer said on Thursday he has cut 15 jobs in
the company's structured bond business as it shifts focus to
investment opportunities in corporate bonds and the loan
The latest moves mark Aladdin Capital's transition from a
Stamford, Connecticut-based alternative asset manager to a
boutique investment bank under its recently hired CIO.
Vice Chairman and CIO Neal Neilinger said he made the cuts
to the company's collateralized debt and loan obligation desk,
trimming global headcount to about 75 staffers.
"We are going back to good old-fashioned investing,"
Neilinger said in an interview.
Neilinger, who joined the firm in October from Calyon, the
corporate and investment banking arm of the Credit Agricole
group, said the moves are part of a restructuring plan to build
its advisory and investment banking businesses. He does not
anticipate significant origination of CDOs or CLOs in the next
Global issuance of CDOs plunged to $60.9 billion in 2008,
versus $442.5 billion in 2007 and a record $478.8 billion in
2006, according to Thomson Reuters data.
That drop in business has spurred massive job cuts and
restructuring across the financial industry impacting Wall
Street, rating firms and asset managers.
Corporate bonds in the United States and Western Europe
offer good value, Neilinger said, after corporate bond spreads
recently hit record wide levels.
High-grade corporate bond spreads have rallied over the
past month, narrowing to 560 basis points through Wednesday,
from a record 656 basis points in December, according to
Merrill Lynch & Co data.
Sales of investment-grade bonds slid almost 35 percent to
$645 billion in 2008, from $986.8 billion in 2007, according to
Thomson Reuters data.
After a four-month freeze on new issuance following the
first half of 2008, the primary market has reopened on the back
of an FDIC plan to guarantee the new debt.
Companies sold $44 billion of debt in November, $16 billion
of which was backed by the FDIC. In December, the number rose
to $86 billion, of which $63 billion was backed by the FDIC.
In 2009, companies have sold $52 billion of debt, $9
billion of which was backed by the FDIC.
"I see tons of value in investment-grade corporate bonds,
certain sectors of the levered loan market, agency and mortgage
products," he said.
He said he sees less value in U.S. Treasuries.
"The name of the game in the last year was Treasuries,"
Neilinger said. "Now you have to watch that market. It has the
characteristics of a bubble all over it."
Benchmark 10-year note yields, which move inversely to
prices, are trading not far above December's five-decade low of
2.04 percent and could fall back to that area if stress in the
financial system should rise and signs of economic distress
intensify, analysts have said.
(Reporting by Walden Siew; Editing by Tom Hals)