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As ailing companies pile up, RBC snaps up key hires in distressed-credit trading

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  • Some corners of Wall Street are staffing up in preparation for the wave of US companies that are reeling from the coronavirus pandemic. 
  • RBC Capital Markets has made two key hires in distressed-debt trading in recent weeks, adding Jim Russo from PointState Capital and Callie Simpkins from Goldman Sachs. 
  • The timing of the hires "lined up perfectly," but they're part of a broader effort to bolster the firm's leveraged finance trading platform, RBC execs Adam Savarese and John Maggiacomo said.
  • Asset managers are amassing enormous distressed-debt funds, and Wall Street banks that serve them stand to benefit as that money is deployed into the market. 
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RBC Capital Markets has snapped up key hires in distressed-debt trading in recent weeks, as some corners of Wall Street are staffing up to deal with the wave of US companies reeling from the coronavirus pandemic.
Since March, RBC has brought aboard two new staffers in distressed credit — part of a broader effort to bolster the firm's leveraged finance trading platform, the company confirmed to Business Insider.
Jim Russo, formerly a portfolio manager at hedge fund PointState Capital, started at RBC as a director in distressed credit trading last week. Before PointState he spent six years in distressed sales at Citigroup, and he worked at Barclays and Lehman Brothers during the last economic crisis.
Callie Simpkins is joining RBC from Goldman Sachs' leveraged finance sales desk, where she started her career in 2013. She's set report to the office in mid-May as a director focused primarily on distressed hedge-fund clients, though she'll work across the spectrum in credit.
The hires are timely, but Adam Savarese, head of US high yield and distressed trading, and John Maggiacomo, head of US leveraged finance sales, told Business Insider they've been angling to bolster their group with talent upgrades for more than six months.
"We felt talent was available and that we could significantly improve the platform with a few key hires," Savarese, a former Goldman Sachs partner who joined RBC in September, said in an interview.
The market turmoil in recent months has unlocked hiring opportunities, Savarese said, as some banks reassess their investments in their sales and trading businesses.
"These hires lined up perfectly, given the timing," Maggiacomo added.
Morgan Stanley has also been hiring in recent weeks, poaching Matt Weinstein, one of Deutsche Bank's top distressed traders, as its new head of North American distressed trading.
Amid the unfolding economic damage as the US tries to curb the spread of the coronavirus, as well as price shocks in the oil market, distressed-debt opportunities are expected to flourish.
Over the course of a single week in March, the amount of distressed credit in the US tripled to nearly $1 trillion.
Even as asset managers are taking a bath on debt holdings from floundering companies, they're amassing large funds to capitalize on beaten-down valuations and buy up debt on the cheap.
Blackstone, whose credit arm posted large declines in its distressed strategies in the first quarter, is raising a new $7 billion credit opportunities fund.
Oaktree Capital said it's rapidly deploying assets in its current debt fund, and is trying to raise another $15 billion distressed fund, potentially the largest of its kind, according to Bloomberg.
KKR, PIMCO, Cerberus Capital, and Highbridge Capital are also amassing piles of cash to chase the opportunity.
The influx of capital will be a boon to Wall Street investment banks that facilitate such trading, too.
The billions from these high-profile fund raises may not be deployed for some time, but the market turbulence has led asset managers across the spectrum to broaden their investment horizons.
"Clients are becoming more product agnostic in this dislocation and looking for opportunity across the capital structure," Savarese said.
RBC will continue to add talent to meet that demand, if the right situation arises, Maggiacomo said.
"If we were to find the appropriate addition, the current environment wouldn't stop us from moving forward," Maggiacomo said.
SEE ALSO: Morgan Stanley hired a top trader away from Deutsche Bank in distressed credit — an area primed for a boom as corporate debt gets crushed
SEE ALSO: Meet the 10 Wall Street power players picking through up to $1 trillion in distressed debt to bag huge returns
SEE ALSO: POWER PLAYERS: Meet 20 Wall Street restructuring bankers who will navigate the defaults and bankruptcies of the coronavirus crisis
SEE ALSO: There's more than $10 billion waiting to pounce on the struggling real-estate sector. Distressed debt tied to a trendy Brooklyn hotel could be one of the first hospitality opportunities.
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