Summit News

Cantor expands debt markets business

NEW YORK (Reuters) - While most Wall Street firms responded to the current credit crunch by cutting hundreds of fixed-income jobs, Cantor Fitzgerald LP Chief Executive Howard Lutnick said on Monday his firm is hiring debt salesmen and traders.

Cantor, one of the world’s largest bond brokerages, has been bulking up a debt trading business that currently has about 200 professionals. The closely held firm has been adding about five new sales and trading staff a week, Lutnick said at the Reuters Finance Summit in New York.

“We are looking for specialized people, people who have relationships with customers. We are hiring about five a week, so we are more popular now than most (firms),” he said.

Last week, for example, Cantor hired Dean Schultz of RBC Dain Rauscher RY.TO for its fixed-income sales and trading team. As part of the news announcement, Cantor's credit sales head, Larry Haag, posted his phone number and encouraged traders to contact him.

A meltdown in mortgage markets over the summer has triggered a broader credit crunch that has slashed the value of asset-backed bonds, collateralized debt obligations and corporate buyout loans. The crunch has slowed the underwriting and trading of many kinds of debt

By the same token, it is also creating opportunities.

“Cantor Fitzgerald is building its debt capital markets, our credit business, because we know there are still customers -- hedge funds, pensions, small banks and institutions -- who will still buy paper,” Lutnick said. “As that paper gets cheaper, that paper is getting better and better and better.”

The goal, he said, was to create a debt markets business on par with the "super-regional" commercial banks such as Wachovia Corp WB.N -- much smaller than businesses managed by bulge bracket leaders like Goldman Sachs Group GS.N or Merrill Lynch & Co MER.N.

“The upheaval in the mortgage market makes trading mortgages a great business. Corporate bonds. Agencies. I mean, those are the key businesses for us,” Lutnick said.

Cantor also intends to structure debt securities and “repackage” mortgage assets for sale back into the market, he said.

On October 24 Lutnick took over running Cantor’s fixed-income business. He succeeded Irving Goldman, who departed the firm suddenly after four years amid reports that he had lost millions on proprietary trades.