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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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From: Paul Kern8/24/2007 6:40:02 AM
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Barclays Capital exec quits amid turmoil

Banker in charge of collateralized debt obligations resigns as investments run into trouble.

August 24 2007: 4:44 AM EDT

LONDON (Reuters) -- A senior official in charge of a structured finance team at Barclays Capital, the investment banking arm of British bank Barclays Plc, has quit amid the recent credit market turmoil, a source familiar with the matter said.

Confirming newspaper reports on Friday, the source said Edward Cahill, who was head of the bank's European collateralized debt obligation (CDO) division, had left this week.

Cahill's team has been among the most innovative players in the market, embracing highly leveraged structured investment vehicles known as SIV-lites, which combine traditional SIV and CDO technologies and have been more profitable.

However, Standard & Poor's cut ratings on two SIV-lite investment vehicles by up to 17 notches on Wednesday after the U.S. mortgage market crisis hit the value of securities they bought and their short-term funding dried up.

SIV-lites can be more than four times more leveraged than traditional SIVs and invest in portfolios that have less sector diversity. With short-term funding disrupted and prices for their assets dropping, some are now being forced to sell assets at a loss.

Cahill had worked at Barclays Capital since 2004.

Barclays Capital had no immediate comment.
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