| A Day in the Life: ABS investor |
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| Patrick Coleman is head of treasury with Commerzbank Europe (Ireland) An active asset-backed securities (ABS) investor, he manages both trading and investment books worth €2 billion. |
6:50am Wake up to AM Kelly on Today FM’s early morning show. Take a quick shower, and then shave. After a bowl of cereal and an actimel I’m on my way. I radio hop between Today FM and Newstalk 106 on my drive to work. No traffic hold-ups - August is great but I’m not looking forward to September and the back-to-school run. I used to cycle to school; does anyone cycle to school anymore?
8:00am I arrive at the office. There are four of us in total in the CBE(I) dealing room. Treasury is responsible for the bond portfolio and for funding and interest rate mismatch management. Alan Butler is responsible for our ECP programme and looks after the bank’s daily liquidity requirements. He is ably assisted by the newest addition to the desk, Orla McHenry. Alan and Orla are already busy posting cash and CP levels. They give me a quick rundown of the overnight and early morning markets and today’s positions.
8:15am Start to check my Bloomberg messages and email. I make a mental note to ask IT about filtering out some messages. Each day I seem to accumulate more mail, and coming back after a few days off can be a nightmare. I check secondary ABS and FRN offer lists from the main brokers. Most offer lists come with a commentary on recent trading activity. The daily ABS trading comment from Citigroup and UBS is a must read. I see that the UK RMBS product has continued its recent spread-widening trend. Also I read that two large UK RMBS issuers have recently filed with the SEC for large upcoming issues - this should have an adverse effect on spread levels.
8:30am Look through my outlook diary to see what meetings I have for the day ahead. Even though the new issue ABS market is quiet in August, there are a lot of roadshows and presentations scheduled for the month. We have as US large loan CMBS presentation in the afternoon, and a lunch meeting with a US leveraged loan manager. I then check the overnight risk positions for our investment and trading books.
9:00am Chat with Liam Dunne, who works with me on the ABS portfolio, about a few deals we are working on. Liam has been looking at a secondary CDO position that he thinks offers good value relative to where the new issue market is coming. We look at the new issue pipeline and break down the deals on an asset class basis.
9:30am Call some of the brokers and investment banks to chat about new issues, some secondary positions and the likelihood of Dublin winning an All-Ireland. After a few phone calls I am assured that the ABS new issue pipeline is very healthy, the secondary ABS market is expensive and that with a dodgy full back line and an unsettled midfield there isn’t much chance of seeing Sam Maguire inside the ‘Pale’ for the next few seasons.
10:30am I buy a Dutch RMBS in the secondary market that has widened in spread since its launch. I have sold a number of positions from my trading book recently prior to the traditional summer spread widening. Credit spreads performed extremely well in the first half of this year. 2004 will be another record year of issuance for European ABS. Coupled with this increase in supply there has been a phenomenal increase in demand for ABS as new investors have entered the market this year. This has lead to dramatic spread compression in the first half of the year. However, a number of trading accounts have recently stepped back from the market as the pricing levels are at all-time highs, and this has resulted in some of the recent issues underperforming in the secondary market.
12:15pm I head for the bastion of the IFSC social scene, the Harbourmaster Bar, for a lunch meeting with a US CLO manager. The meeting starts with the usual talk about links golf courses in Ireland and previous visits to our fair land. After this brief exchange we get down to business and discuss the leveraged loan transaction that his firm will manage. We get an overview of the leveraged loan market in the US. I then ask a number of questions about the credit process of the firm, the systems that they have and their key people. The firm is a small, stand-alone organisation controlled by one individual. I prefer to see deals from a manager with a good track record and with strong institutional support.
2:00pm Back in the office. I return a few phone calls to some of our counterparties that I missed earlier in the day. I have just received the rating agency pre-sale report on a new deal that I am looking at and I read that.
3:00pm Have a meeting with the originators of a new large loan US CMBS transaction. These deals are getting more leveraged and in an increasing interest rate environment, they run a big refinance risk. We discuss the structure of the deal and then focus on the 10 largest loans in the transaction. Overall the deal is well structured; it has strong properties and sponsors backing the loans. I will wait for final price talk before I decide on whether to purchase the deal.
4:15pm Alan has just received a big order late in the day for 1-year ECP. We all have a quick discussion on where we see rates in the next few months. Alan thinks he should swap the paper against 1-month libor. He issues the ECP.
5:00pm I respond to emails that I have received earlier in the day. I have a meeting tomorrow to discuss budget planning for ‘05 and its only August! I start to put some numbers together for next year's budget. Again we are looking to grow our balance sheet. We will look at new asset classes and rating stratifications next year. I must put an additional body in treasury into next year’s budget.
5:55pm A quick glance out the window at the traffic on the quays tells me I have a chance to make it to the gym for a swim. I logoff from my email and Bloomberg before the deluge of mail arrives. I will sit down at my desk again tomorrow morning cursing the number of emails that I receive.
7:15pm Arrive home to my wife Caroline, where we discuss options for dinner. Once we agree, I start to get out the ingredients required and begin to cook. We have a great working arrangement in our modern marriage - I cook and she shops! As the dinner is cooking I flick through this week’s Economist.
9:00pm Watch the RTE news to catch up on events ‘ar fud na tire’. There’s nothing on the box after the news so I take my collection of the Sopranos on DVD and I watch an old episode. Watching Tony Soprano in action I wonder is there any way of employing his management style into the daily operation of a modern treasury department? I decide his style is a bit too aggressive.
11:30pm Another day over, I head for my ‘leaba’ and a ‘codladh samh’. |
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| Article appeared in the September 2004 issue.
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