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The Philippines foreign exchange derivatives market is trickling back onshore after the central bank responded to derivatives houses lobbying and lifted restrictions it had imposed earlier this year. "Customers are coming back onshore," said John McGowan, treasurer at HSBC in Makati City. "Given the cost implications, it makes sense to move back onshore, though it may take some time," he added.

"We'll look at reallocating our portfolio then and possibly increase our bond holdings as well as use derivatives."--Sei Young Park, manager of the investment department at Daehan Fire & Marine Insurance in Seoul, commenting on the firm's plans to use derivatives for the first time. For complete story, click here.

Five-year credit-default protection on Parmalat, an Italian dairy producer, blew last week on the back of Standard & Poor's decision to put the corporate's BBB minus rating on negative CreditWatch on Tuesday before coming someway back after it sorted out its investment portfolio. S&P's decision caused spreads to widen as far as 640 basis points on Tuesday from 350bps the day before, according to a London-based trader.

A Standard & Poor's collateralized debt obligation conference last week divulged two revelations about recovery rates in CDOs, something that bankers and investors have started to look at more closely since the rating agencies published data showing how much they can vary between deals (DW, 12/9). The conference disclosed innovations in both securitizing recovery rates and their relationship with the trading prices of defaulted assets.

S&P held its Annual Global CDO Conference in New York last Tuesday. Several hundred CDO professionals met to discuss the latest developments and innovations. Karen Brettell, senior reporter, attended.

Derivatives professionals are predicting the onshore interest rate options market in India will get the green light within six months. Srinivasan Varadarajan, treasurer at JPMorgan in Mumbai, said the instruments will likely get the go-ahead before the second quarter of next year after the nascent interest rate swap market matures further. A trader at Bank of America pinpointed the timing to likely be at the Reserve Bank of India's credit policy meeting in April. Alpana Killawala, spokeswoman at the RBI in Mumbai, did not return calls.

In spite of continued interest in bringing to market synthetic collateralized debt obligations referencing municipal bonds, the challenge of transferring the underlying tax benefits to structured deals continues to hold up issuance. Vandana Sharma, director at Standard & Poor's in New York, said interest in muni structures has evolved from preliminary discussions to now evaluating specific pools of assets and undertaking tranching exercises with specific structurers. In spite of this the asset continues to be in a developmental stage due to the problem posed in preserving the tax-exempt status of the cash flow from such securitizations, she said.

Newcastle Building Society has entered a swap to structure its first guaranteed mixed asset bond, which gives participation in interest rates, the FTSE 100 and the Halifax house price index. Leslie Pape, treasurer in Newcastle-Upon-Tyne, said this is the first time it has combined exposure to both equities and house prices.

Auto-parts chain AutoZone took no chances on interest rates for its USD500 million note sale, which was priced last week, and entered Treasury locks beforehand. Jay Cook, treasurer in Memphis, Tenn., said the corporate entered the Treasury locks in the months ahead of the bond sale in order to lock in attractive rates. He declined to specify the exact rates. In the bond issue, AutoZone launched USD300 million of 12-year notes that offer a 5.5% coupon and USD200 million in 10-year notes with a 4.75% coupon.

--Tom McCue, treasurer of Ispat Island, noting the ambiguity of how the World Trade Organizations' recent ruling against U.S. steel duties would ultimately affect the company.

When going through a list of active secondary names last week, one dealer mentioned that the new MCI equity started trading on a when-issued basis.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.