Glenn McDermott has returned to Citi to head structured sales in Asia. He previously worked as a sales director in the same department in the bank’s New York office.
That first stint at Citi ended when he left to join Wachovia in Hong Kong as head of structured credit product distribution, just as the credit crunch started to bite. Then, in 2009, he joined other ex-Citibankers at Amias Berman & Co as global head of alternative assets.
He rejoins Citi at a time when the structured credit market is starting to warm up after a four-year hiatus. Yield-hungry credit buyers have been making do with flow products to earn returns in the meantime, but that is no longer as profitable as it was and not, anyway, a good long-term strategy. As demand for more yield has returned, so has issuance. US sponsors structured $12-15 billion of collateralised loan obligations (CLOs) last year. Still far off the pre-crisis peaks, but a sure sign that the market is reawakening.
“We are seeing an increased demand from our clients across the region for alternative asset products such as structured credit,” said David Ratliff, head of markets sales at Citi. “As a result of significant yield compression in a number of our traditional products, many of our clients are increasingly investing in structured credit products to enhance yields and to better match asset and liability profiles.”
For now, investors are steering clear of the most notorious products of 2007 and earlier, which layered derivatives on top of derivatives and concentrated risk. Rather than subprime securitisations or CDO-squared, investors are sticking to simpler single-derivative products.
McDermott’s role will be to build a salesforce to sell offshore products from US investment managers such as BlackRock into Asian markets, particularly Taiwan and Korea, and develop emerging-market sales across Citi’s regional network. On the liability side, he will also lead efforts to sell structured credit solutions to the bank’s corporate clients.