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April 27, 2018  

Cantor to Install CLO-Underwriting Team

Cantor Fitzgerald is positioning itself as an underwriter of collateralized loan obligations.

The broker-dealer has been seeking a banker to lead the effort, but has yet to zero in on a candidate.

The recruit’s efforts would complement those of a longstanding CLO-trading business led by Ervin Pilku in New York. The push also would dovetail with a broader expansion that Cantor has been pursuing in the structured-product industry under the direction of former Deutsche Bank co-chief executive Anshu Jain, who arrived in January 2017 as president.

Cantor would face stiff competition in the CLO-underwriting business, where more than 20 banks already are active and more are trying to break in — including several smaller broker-dealers. The appeal: With issuance volume running strong, the sector has been one of the structured-finance industry’s richest sources of investment-banking fees. And that’s before accounting for income the institutions collect for helping to refinance existing deals.

Still, industry participants see Cantor as a potential contender. “I agree that they are late to the party, but it has become a very big party,” one investor said. “There is probably some space for a good team.”

Another source suggested the initiative could be coming partly in response to a broad slowdown in secondary-market trading volume in the CLO industry.

While Cantor has long maintained a presence as a structured-product dealer, it especially has been building up since September, when it hired a group of traders from Credit Suisse. Among them were Jim Buccola, now Cantor’s fixed-income head, and Marshall Insley, who oversees the firm’s securitization team alongside Cass Tokarski.

Last week brought word that Cantor also had hired high-profile commercial mortgage bond specialist Paul Vanderslice away from Citigroup. And it nearly convinced Peter Sack to leave his job as head of Credit Suisse’s residential mortgage finance team. A number of sales professionals have come on board as well. “We are hiring very experienced, valuable people and getting to a critical mass of talent,” one insider said.