02/03/2012

S&P Ousts Duka as Head of CMBS Group

S&P has relieved managing director Barbara Duka of her duties as commercial MBS chief, continuing an overhaul of senior management that the rating agency kicked off several months ago.

It hasnít been determined whether the S&P veteran will leave the company or shift to another role. No replacement has been named so far.

As lead analytical manager for CMBS, Duka was responsible for new-issue ratings and surveillance. She reported to managing director Grace Osborne, who continues to oversee the commercial and residential MBS rating groups as business leader for U.S. mortgage activity.

The change in Dukaís status came about six weeks after S&P removed David Jacob as structured-finance head and reassigned chief credit officer Mark Adelson to a senior research role. Industry professionals, including some at rival rating agencies, interpreted S&Pís latest move as another sign that itís trying to repair its battered image in the CMBS sector.

Once the perennial market leader, S&P has seen its share of new-issue assignments drop sharply since a controversial decision to overhaul its CMBS ratings criteria in 2009. The intent was to appeal to investors by taking a tougher stance on credit quality. But many buysiders were upset by the resulting swath of downgrades of legacy CMBS and how they were handled by S&P.

Adelson and Jacob took much of the blame for the fallout from the criteria changes. But Duka also found herself in the crosshairs last July, when S&P abruptly withdrew its ratings on a $1.5 billion multi-borrower transaction after it was priced by Goldman Sachs and Citigroup. The deal had to be scuttled on the eve of settlement, infuriating investors and costing the issuers millions.

Since that fiasco, issuers have bypassed S&P on fixed-rate, multi-borrower CMBS offerings ó the sectorís bread-and-butter type of deal. But S&P is widely expected to regain a big chunk of its market share over time, and its recent management overhaul is being viewed at least in part as a step toward achieving that.

It also seems clear that executive managing director Paul Coughlin is putting his own stamp on the structured-finance group, which he assumed from Jacob in mid-December. Coughlin reports to president Douglas Peterson, who succeeded Deven Sharma in September. Jacob will leave S&P this month.

S&P also took an axe to its asset-backed securities team this week, letting go managing directors Diane Westerback and Jennifer Schneider Weiss, as well as a number of analysts. Weiss, who previously reported to Jacob, was hired last June to manage relationships with issuers and help them understand how S&P operates ó including the application of its structured-finance criteria.

Duka joined S&P in 1998, after working at the former United Jersey Bank of Princeton, N.J., for nine years. She and Eric Thompson were appointed co-heads of CMBS in 2008, with Duka retaining responsibility for rating new issues and Thompson maintaining oversight of the surveillance area. Duka became sole head of the CMBS group last March, two months after Kroll hired Thompson as its CMBS chief.

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