Jefferies Group Inc., the investment bank expanding its fixed-income business, hired a money manager from Pacific Investment Management Co. to trade municipal securities as forecasts mount of rising defaults on the debt.
Danford Peterson, who was a senior vice president at Pimco focused on munis, will work as a managing director in Jefferies’s municipal securities group in New York, the New York-based firm said today in an e-mailed statement. Before joining Pimco, Peterson worked for more than 10 years at Goldman Sachs Group Inc.
Jefferies, with more than 100 bankers, traders, sales people and other workers in its municipal group, is hiring Peterson as economists and analysts predict growing distress among governments grappling with budget deficits and tax collections that haven’t returned to pre-recession levels.
Banking analyst Meredith Whitney rattled the $2.93 trillion municipal-debt market in December, predicting “hundreds of billions” of dollars of defaults could occur in 2011. The consulting firm of Nouriel Roubini, the New York University economist who in 2006 predicted the credit-market collapse, said in a report dated Feb. 28 that about $100 billion of U.S. municipal debt will default over the next five years.
JPMorgan Chase & Co. Chairman and Chief Executive Officer Jamie Dimon said March 31 at a U.S. Chamber of Commerce event in Washington that some municipalities will need to renegotiate debt and a hundred may not “make it.” Dimon cautioned the audience not to panic about his comments, saying it’s it won’t “shatter America” and is just “a part of the credit cycle.”
Pimco, manager of the world’s biggest bond fund, is based in Newport Beach, California.