Derivs - Credit

Nomura Holdings is reportedly juicing compensation packages to get top performers at Lehman Brothers’ Asia-Pacific operation to stay on, after agreeing to buy the unit for an undisclosed sum.

The impact from the Lehman Brothers bankruptcy and Nomura Holdings’ impending takeover of the firm’s Asia-Pacific operation should be manageable for rival banks in the region, but the indirect consequences will require careful monitoring.

The U.S. government’s plan to relaunch a Resolution Trust Co. caused Europe’s iTraxx Main index to rally 26 basis points to trade at 109 bps on Friday.

Some consultants and money managers are concerned about exposure to Lehman Brothers as a swap counterparty within portable alpha strategies.

Volume in the already thin loan-only credit default swap market dropped off noticeably this week as players sought to unwind positions, primarily with Lehman Brothers Holdings.

Credit default swap protection on Morgan Stanley traded in a wide range today, closing at 858.75 basis points, 75 bps tighter than it opened.

Five-year senior credit default swap spreads on HBOS tightened Thursday morning in London on the back of the unveiling of the Lloyds TSB GBP12.2 billion takeover bid.

With Edward Liddy, former chief of U.S. insurer Allstate, installed at the helm of American International Group the Street is buzzing about what the appointment will mean for its non-insurance activities, such as derivatives.

Credit spreads on U.K. mortgage lender HBOS pulled in during trading today, while spreads on its potential white knight Lloyds TSB ballooned.

Market participants expect a slow unwind of American International Group’s giant credit derivatives portfolio after the insurer was flung a USD85 billion lifeline by the U.S. Federal Reserve.

Five-year credit default swaps on American International Group are trading at 32 basis points upfront, above the running spread, down from 39 bps yesterday after the bailout news.

PricewaterhouseCoopers has hired Linklaters partner Simon Firth to help unravel Lehman Brothers’ complex derivatives book.