May 3, 2019 / 3:05 PM / 4 months ago

MOVES-Regions beefs up loan platform with focus on broadly syndicated debt

NEW YORK, May 3 (LPC) - Regions is expanding its loan sales and trading platform to the broadly syndicated market, hiring Kevin Dooley as head of loan trading as trade volume in the asset class reached a near-record high in the first quarter.

It is looking to add two to three salespeople in the next 12 to 18 months that have client relationships with both middle market and broadly syndicated institutional loan accounts, according to Rob Heffes, head of trading and credit distribution at Regions, who joined the bank in 2016.

Dooley joined Regions from Natixis. He previously worked at BNP Paribas, RBS and UBS, according to FINRA BrokerCheck.

The move expands Regions’ footprint in the institutional market, where some of the largest companies including American Airlines and Hilton Worldwide turn for financing. The bank had historically focused on so-called pro-rata loans, which include a revolving line of credit and a term loan A, which is typically sold to banks, rather than the broadly syndicated term loan B market, which is typically sold to mutual funds and Collateralized Loan Obligations.

Regions had previously focused on pro-rata distribution based on the clients it lent to, but is expanding that focus, Heffes, who previously served as head of credit product sales and trading for CRT Capital and global head of high-yield trading for UBS, said in a telephone interview.

“The business model is to support our corporate clients who need broader access to the capital markets, and having tools to allow them to do so,” he said. “We felt we didn’t have the depth to get into the larger rated markets in a material way and that is why we are growing the business.”

There was near-record loan trade activity in the first quarter with US$224.2bn of volume, just missing the record of US$224.3bn set in the last three months of 2018 amid increased volatility, according to IHS Markit data.

US leveraged loan prices dropped more than 4 percent in the fourth quarter, but have since rebounded, improving 4.1 percent this year through May 2, according to the LPC 100, a cohort of the 100 most widely held loans tracked by LPC, a unit of Refinitiv.

“The message is, we have a strategic rationale for being in this business,” Heffes said. “We are going out of our way to find the right talent to bring in so that we can build something that fits Regions’ culture for both issuers and investors, and we will be patient in how we build out the business. We will build it the right way that stays true to the Regions’ mission.” (Reporting by Kristen Haunss; Editing By Michelle Sierra and Jon Methven.)

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