Morning Coffee: The mysterious ex-UBS banker pioneering the latest method of slicing risk. Systematic credit traders sought by hedge funds

If you're really good at what you do, you will not need a LinkedIn profile proclaiming it. Nor will you have a website expounding it. Nor will you even need to be based in one of the world's major financial centres. You might be Belgian.

Get Morning Coffee ☕ in your inbox. Sign up here.

Alexandre Kartalis is all these things. A Luxembourg-based Belgian who describes himself as "an investor in financial services, media and real estate" who spent 13 years in "financial institutions", Kartalis works for Advanced Credit Solutions (ACS), a small firm whose website says simply that it invests in the "real economy." Bloomberg suggests there's more to it, and to him.

As Apollo, the enormous US private capital fund, doubles down on the provision of guaranteed income to pensioners through annuities, Bloomberg says Kartalis is at the forefront of a new trend in financial innovation, which doesn't sound entirely dissimilar to the trends that have gone before. 

Working with Fox Hedge, a $5bn Apollo fund, Kartalis and ACS are reportedly in the business of slicing and dicing risk so that junk-rated credit can be repackaged and sold-on for use in heavily regulated annuities and beyond. 

The familiar-sounding problem, says Bloomberg, is that Treasuries and mortgage bonds don't offer good returns. Private credit and other assets do, but they come with big capital charges for the regulated annuity insurers investing in them. ACS is reportedly helping Apollo to avoid this conundrum by bundling assets like real estate debt into a Bermuda-based vehicle, which then issued its own bonds, some of which have 40-year maturity, despite the fact that the assets it's using as collateral won't all be around that long. Moody's reportedly estimates that 86% of these Bermuda bonds are then sold back to Apollo's other funds, which manage pension assets and annuities.

It all sounds very exciting and as if Kartalis - who once appears to have worked for Credit Suisse and for UBS - and who is a collateralised loan (CLO) professional by trade, might have pioneered something very shiny and new. His new creation is a bit like a CLO and a bit like a collateralised fund obligation, people tell Bloomberg. It looks and feels like a securitization, but it uses corporate debt, which might let it sidestep the rules saying securitizations themselves can't be used as collateral. ACS reportedly uses its management fee to help pay for the riskier slices debt. Magic.

Apollo didn't comment to Bloomberg on the new structure, but its CEO Marc Rowan is said to be stoked about it. As the man of the moment, Kartalis has no need to draw attention to himself. This will also apply if the investments underpinning a generation of pension assets happen to go wrong.

Separately, credit traders have been bemoaning the fact that voice traders are dying out in credit sales and trading, while they say systematic credit trading isn't viable. 

Boaz Weinstein, the former Deutsche Bank trader and founder of hedge fund Saba Capital, has other ideas. Reuters reports that Weinstein is expanding into quantitative credit trading and hiring senior quantitative credit traders as he does so. His recruits so far include a senior portfolio manager from Millennium and some traders from Jane Street. 

Voice credit traders may not be able to achieve the new quant jobs themselves, but it's nice to know that some people can.

Meanwhile...

Athene, Apollo's inhouse insurer, says its rivals are more guilty of investing their insurance funds in their own assets. (Financial Times)

London bankers are all about M&A, not ECM now. “Five years ago we were skewed towards capital markets [IPO] revenue and had a chunk of advisory work . . . Now we are making more money out of advisory work.” (Financial Times) 

Mark Lynagh, the head of UK investment banking at BNP Paribas, say: “I’ve worked here for long enough to skip the pleasantries and immediately get good ideas from talking to people." He also says: "We’ve not done the big splash team hires, that’s never been the strategy of the bank. But we continue to selectively add talent to our UK-based sector, advisory, coverage and broking teams.” (Financial News) 

Reid Marsh, who was latterly global chair of investment banking at Barclays, is leaving the bank in September. (Financial News) 

Soho House is being taken private in a $2.7bn deal involving a hotel operator. Shares were sold for $9, which was above Friday’s $7.60 close but below the $14 price tag when Soho House floated in 2021. (Financial Times) 

Rokos, Tyrus, Hudson Bay, QRT, Jane, Blue Crest, Arini, King St., Millennium, BAM are all in the UAE now. "My estimate is that Dubai and Abu Dhabi employ 4% of the global HF workforce." (X/Twitter)

Hedge fund managers on $100m might become a thing. “Don’t be surprised to see pay packages in excess of $100m regardless of the state of the hedge fund hiring market and AI’s impact.” (Financial News) 

Jefferies is expanding in APAC. It hired Michael Melly from JPMorgan as head of APAC FIG banking. (Bloomberg) 

Senior investment bankers like to waste/spend their money as angel investors."After years of analysing balance sheets, modelling cash flows and structuring deals, it’s tempting for former bankers to think they can identify start-up winners. But venture runs on a different rhythm. It’s longer and less structured than any investment banking project." (Financial Times) 

Tattoos are no longer judged negatively in job applications. No significant differences were found between tattooed and non-tattooed applicants in terms of competence, warmth, and trustworthiness. (Graduate College of Bowling Green State University) 

Your reminder that JPMorgan's new office has 19 food operators, two outdoor gardens, meditation rooms, a hair salon and a luxury fitness and wellness center. (WSJ) 

Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. Signal also available.

Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libellous (in which case it won’t.) Eventually it will – unless it’s offensive or libellous (in which case it won’t.)