Derivs - Credit

Chinese retail giant Maoye International Holdings is taking a stab at issuing its first dollar bond, even though volatile bond markets have paralysed issuance since May 22.

Investors should sell five year credit default swaps on French cement player Lafarge as spreads are overvalued compared to HeidelbergCement.

Last week investors were feeling nervous about emerging market credit. Fund outflows were increasing and spreads in emerging market sovereigns widening sharply.

Institutional investors scooped profits by unwinding short-term puts on the iPath S&P 500 VIX Short-Term Futures Exchange-Traded Note (VXX) just prior to comments from U.S. Federal Reserve Chairman Ben Bernanke on Wednesday, setting out that the U.S. may scale back bond purchases.

The CDX is overvalued and investors should look to short it. That’s the view of a number of Street analysts.

Asset manager Assenagon is among the players that are switching from buying bonds to selling credit default swap protection on the same underlyings to take advantage of potential gains on higher CDS spreads.

Nomura is shrinking its equity sales, trading and research teams in Australia, which will lead to redundancies.

ICICI Bank launched an offshore renminbi deal on June 18 hoping to net some of the strong demand that Caterpillar Financial Services Corporation received a day earlier for its dim sum.

For investors looking to position for a reversal of the recent sell-off in the belly of the sterling swap curve, strategists at Barclays recommend 3m*4y receiver spreads and 3m*(7y-30y) bull steepeners.

Investors should buy receiver spreads 1x2 and ladders on the iTraxx Main, since such instruments offer a cheap or zero cost way to construct a bullish position ahead of an address by Ben Bernanke, the chairman of the Federal Reserve, at the Federal Open Market Committee on June 19. Bernanke is expected to announce that the Fed will begin tapering monetary policy in the U.S., leading some strategists to take a position on the iTraxx Main that will benefit in the event that the index tightens.

The first South Korean synthetic exchange-traded funds will likely reference U.S. and Korean high yield bonds and real estate investment trusts when the market starts trading sometime this summer.

Barclays made the most senior hire of the week, appointing ex-Goldman Sachs trader Michael Winkelgrund as head of exchange-traded fund trading. Deutsche Bank, meanwhile, hired Monty Lee as a senior index options trader from Barclays. In Asia Pacific, Nicholas Smith has replaced PJ Andersson as global head of pan-Asian equity derivative and convertible sales at Citigroup, after the latter left the firm last week.