Deutsche builds emerging market structured products group

Deutsche Bank has hired Hugo Faria to co-head its emerging market structured products area for the Americas. Faria will head the 14-person Latin America team, which develops products for credit, foreign exchange, commodities and interest rate risks.

Faria is a 14-year veteran of emerging and structured products markets, most recently with Merrill Lynch. At Merrill he covered Latin America for the bank's fixed-income structured finance group. Faria is based in New York, along with fellow co-head Karim Zahmoul.

According to Laurence Shreiber, global head of emerging market structured products in New York, Faria is expected to provide a special boost to liability management and commodity-linked business with Latin American clients.

Deutsche has placed a strong focus on commodity derivatives of late. Kerim Derhalli, global head of commodities at the bank, has set a target of being in the top three across all major commodities categories. In March, Deutsche moved Kevin Rodgers, head of its highly profitable forex options group, to commodities to build a correlation trading team from scratch. Overall, the commodities group is set to increase staff by 50% this year, according to Deutsche officials.

"A number of important competitors have pulled out of that market, and we think there's a lack of service being provided to customers. We actually think commodity transactions in the emerging markets offer attractive opportunities," said Shreiber. A commodity-linked deal in the Latin American context could involve arranging forward metals contracts in a local currency for a Latin American mining company. The arrangement would be special because such contracts are usually offered in US dollars, said Shreiber.

Faria will also focus on insurance derivatives and portfolio products.

The emerging markets structured products group recently structured an insurance derivatives wrapper for a $200 million, 10-year bond issue in April for Unibanco, a large Brazilian bank, improving the issue's rating from BB to A3. Credit enhancement has been hard to find in the Brazilian insurance market.

On the portfolio products side, Shreiber said his group has structured three private synthetic CDOs involving emerging markets sovereign credits in the past six months, but he declined to provide further detail.

The emerging structured products area has grown from four staff in 1998 to 34, though no new hires are imminent, said Schreiber.