Nov. 23 (Bloomberg) -- Morgan Stanley, preparing for a resurgence in securitized debt sales, hired former Merrill Lynch & Co. executive David Moffitt to lead the effort within the firm’s capital markets division.

Moffitt, 47, starts Dec. 1 in New York as head of global credit solutions and will report to Raj Dhanda and John Hyman, co-heads of global capital markets. Moffitt will coordinate his efforts with J.D. Pearce, 41, who will run the sales and trading part of the business, reporting to Steve D’Antonio, according to an internal memo obtained by Bloomberg.

Morgan Stanley, the second-biggest U.S. securities firm before becoming a bank last year, is hiring as many as 400 sales and trading employees to boost revenue from the business. While debt and equity underwriting have recovered this year after slumping in 2008, Dhanda said he expects the securitization business to rebound next year.

“Within our capital markets business this is one of the big growth areas,” Dhanda, 41, said in an interview. “Nobody expects underwriting to double, but securitization or structured solutions business can double, or triple.”

Demand for securitized debt plummeted in 2008 and 2009 after the worst financial crisis since the Great Depression, which was driven in part by a collapse in the value of bonds backed by home loans. Financial companies around the world have taken more than $1.7 trillion in writedowns and credit losses since the crisis began in mid-2007, according to data compiled by Bloomberg.

“Borrowers’ expectations on what the market will deliver are much more reasonable in terms of price, type of assets, the leverage you can put on it,” Dhanda said.

U.S. Aid Repaid

Morgan Stanley, which reported its first quarterly profit for a year in October, is one of the biggest U.S. banks to return money received from the U.S. Treasury department this year, although it continues to benefit from federal guarantees on some of its debt. The firm repaid $10 billion in June.

Moffitt is joining Morgan Stanley after consulting for about a year at MatlinPatterson Global Advisers LLC, a buyout firm led by former Credit Suisse Group AG distressed-debt specialist Mark Patterson. Moffitt previously oversaw structured-product sales in the fixed-income division of Merrill Lynch, which was sold to Bank of America Corp. last year after suffering losses on structured debt investments.

At Morgan Stanley, Moffitt will gain responsibility for all primary securitization and asset restructuring, according to the memo. Morgan Stanley’s corporate securitization business, led by Tom Cahill, will report to Moffitt, as will the businesses led by Val Kay, Matt Salvner and Kevin Ryan.

Pearce, who works within the fixed-income division, will be the point person handling inquiries from sales and trading clients on credit-portfolio restructurings and asset disposals, the memo said. Tom Jackivicz will lead the effort in Europe, reporting to Pearce, the memo said.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.

Last Updated: November 23, 2009 11:01 EST