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BofA's loans to First Brands secured by collateral

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Morgan Stanley ( MS ) has no exposure

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Wall Street's top execs say risks are idiosyncratic

(Rewrites headline and paragraph 1 with comments from Morgan

Stanley ( MS ), adds context on First Brands and Tricolor throughout)

By Saeed Azhar, Tatiana Bautzer and Manya Saini

Oct 15 (Reuters) - Bank of America's ( BAC ) syndicated

loans to First Brands are secured by strong collateral, while

Morgan Stanley ( MS ) has no exposure to the bankrupt U.S. auto

parts supplier, the banks' top executives said on Wednesday.

The collapse of First Brands, within days of subprime lender

and dealership Tricolor's fall, has unsettled some participants

in Wall Street's multitrillion-dollar credit market, spanning

leveraged loans, collateralized loan obligations (CLOs),

trade-finance funds, and subprime auto loans.

Both First Brands and Tricolor filed for bankruptcy

protection last month.

The turmoil following the announcements has raised questions

about the exposure of several Wall Street fund managers that

pool investor capital to lend to companies.

"We're in the syndicated loan for the First Brands deal,"

BofA Chief Financial Officer Alastair Borthwick told reporters

on a call. "That is an asset-backed loan. So when we think about

prudent risk management, we're thinking about the borrower,

we're thinking about the collateral, and here, we're secured."

Bank of America ( BAC ) said it does not have exposure to Tricolor.

Meanwhile, Morgan Stanley ( MS ) Chief Financial Officer Sharon

Yeshaya told Reuters in an interview that the bank has no

exposure to recent bankruptcies and does not focus on consumer

credit.

"We're not seeing signs of cracks in the credit market, and

that largely has to do with the fact that we believe that

balance sheets are strong," she said, adding that there are

always idiosyncratic risks in credit.

As the third-quarter earnings season kicked off this week,

several top Wall Street executives, from BlackRock CFO Martin

Small to JPMorgan Chase CEO Jamie Dimon, addressed the issue.

JPMorgan Chase also said that it has re-examined its

controls after finding itself exposed.

Meanwhile, Wells Fargo and BlackRock ( BLK ) said credit investing

activity has been strong, despite investor fears of a wider

ripple effect slowing the booming global business of corporate

credit.

"The reported cases look more like idiosyncratic pockets of

stress ... they don't look like broad stresses on asset-based

finance or consumer credit," said BlackRock CFO Small.

Still, concerns persist that a credit market downturn could

trigger further stress.

"When you see one cockroach, there are probably more, and so

everyone should be forewarned of this one," Dimon said on a

post-earnings analyst call on Tuesday.

JPMorgan wrote off $170 million in the third quarter related

to the Tricolor bankruptcy.

Earlier in October, Jefferies disclosed that a fund

in its asset management division, Leucadia Asset Management, has

about $715 million of receivables tied to First Brands. The

investment bank has since said that any losses will be readily

absorbable.

UBS is examining the impact of the bankruptcy of

First Brands on several of its investment funds, with the Swiss

bank exposed to the tune of more than $500 million.