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SunTrust Institutes Draft for Growth Push
Asset Backed Alert, Harrison Scott Publications Inc. (February 2, 2007)
SunTrust Robinson Humphrey wants to add 25 staffers by midyear, as part of an ongoing expansion of its activities in the structured-product business.
The Atlanta division of SunTrust Bank plans to keep recruiting after that too, eventually adding up to another 25 staffers over the next three years. Asset-securitization chief John Giegerich said his team, now at 75 members, needs the extra manpower to handle a range of investment-banking, asset-management and bond-issuing duties.
On the issuing front, a principal-finance unit headed by James Bennison is already warehousing home-equity loans that would collateralize a series of dealer-shelf offerings SunTrust is planning. Most of the underlying credits would come from lender clients who target prime-quality borrowers.
Bennison expects the platform to produce its first deal, totaling $500 million, by April 1. Two more offerings would come by yearend, at which point SunTrust would take on a quarterly issuance pattern.
SunTrust also has plans to issue an increased volume of collateralized debt obligations. Some of the deals would come via an asset-management unit that Bennison oversees - an operation that's separate from his role as head of CDO underwriting for SunTrust and its clients. Others would come via affiliates Baker Street Asset Management and Seix Advisors.
Bennison's CDO-issuing group has four offerings on its calendar for this year: three backed by structured products and one backed by trust-preferred securities from banks. The structured-product issues would total $3 billion, with the trust-preferred offering weighing in at $500 million.
SunTrust, which has put together trust-preferred issues before, completed its first structured-product CDO on Dec. 1. The $611 million offering is collateralized by asset-backed securities, mortgage bonds and pieces of other CDOs with average ratings of single-A. The upcoming structured-product issues would have a similar makeup, although one of them would likely be backed by higher-rated securities and another would target more subordinate bonds with investment-grade ratings.
The deals from Baker Street and Seix would be backed by pools of leveraged loans that those shops originate and purchase. Ian Burt runs Baker Street, in Atlanta. Eric Storch oversees Seix's loan-backed CDOs, in Upper Saddle River, N.J. Each of the operations has issued twice over the last 14 months, and has been seeking to expand its business for a while.
Meanwhile, SunTrust wants to issue more commercial MBS. The initiative would expand on an existing commercial mortgage platform, led by Geigerich, that contributes loans to deals. The group brokered $1 billion of mortgages in 2006.
As part of the undertaking, Giegerich plans to boost the team's annual loan volume by $500 million this year and even more after that.
SunTrust is best known in securitization circles for running Three Pillars Funding, a commercial-paper conduit that it launched in March 1999. The multiseller vehicle, which has $5.5 billion of paper outstanding, has commitments to fund up to $8 billion of receivables for clients, said Michael Maza, who runs SunTrust's conduit and term-ABS banking areas.
Michael Wheeler heads SunTrust's fixed-income sales, trading and syndicate desks.