Icahn Capital LP has hired Courtney Mather, former head of U.S. loan trading at Goldman Sachs Group Inc. (GS), to be a managing director on the investment team.
“His forte is credit markets and distressed positions, which we have done a fair amount over the years, so that will be his specialty,” Icahn said yesterday in a telephone interview. “We look for undervalued situations, which we think he is capable of spotting, especially in the bond area.”
There will be more distressed opportunities in the next few years, according to the billionaire investor. Moody’s Investors Service forecasts the U.S. speculative-grade default rate to rise to about 2.4 percent at the end of 2014 and to 2.7 percent in 2015, the ratings company said in an April 14 report. The default rate ended the first quarter at 1.7 percent.
“A lot of companies that have, shall we say, junk-bond status, have taken on debt at very cheap rates,” Icahn said. “I don’t think it will last.” These companies “may have problems especially if they did the debt at variable rates.”
Loans, which provide financing to back buyouts and help companies refinance debt, had a record year in 2013 with $355 billion of new issuance in the U.S., according to data compiled by Bloomberg. There were $380 billion of high-yield bonds issued last year, according to the data.
The active new-issue loan market led to a 31 percent increase in trading volume in 2013, with $517 billion last year, according to a Loan Syndications and Trading Association trade data study. There was $396 billion of volume in 2012.
Leveraged loans and high-yield bonds are those rated below BBB- by Standard & Poor’s and less than Baa3 at Moody’s.
Mather, who started this month in New York, reports directly to Icahn.
“I am excited for the opportunity to work directly with Carl on his investment team,” Mather said in a telephone interview yesterday.
At Goldman, Mather was named a managing director in 2009 and had responsibilities for loan trading and distressed investing. He previously served on the board of the New York-based LSTA.
Icahn said the firm may consider additional hires for distressed investing if it can “find people of Courtney’s caliber.”
“We are always looking for good people, and we think Courtney is a good addition,” he said.
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