Free content

JPMorgan, a co-founder of the TRAC-X credit default swap index, has requested information about trading procedures on iBoxx, its bitter rival backed by a consortium of 11 market makers, including ABN AMRO and Deutsche Bank. JPMorgan's overture is surprising because the backers of TRAC-X and iBoxx have been locked in a peevish version of the struggle between PlayStation and Xbox in an effort to win market share. Like the fight for video game supremacy, there is only room for one credit default swap index, according to dealers. iBoxx began trading in the U.S. on Oct. 20. Despite the approach to iBoxx,Tom Benison, head of credit derivatives marketing for North America at JPMorgan in New York, said the firm has no plans to trade its rival's index. The objective is to better understand the product with the ultimate goal of moving toward one standard index.

Standard Chartered has recently sold its first foreign exchange options on the Zambian kwacha and the Tanzanian shilling against the U.S. dollar. Charlie Brown, head of structuring in London, said the counterparties on both transactions were local corporates.

Paul Vos and Andrew Bellis, a pair of collateralized debt obligation structurers who recently resigned from Credit Suisse First Boston, are both believed to be heading to Merrill Lynch in similar positions. Vincent Dahinden, managing director in CDO structuring at Merrill in London, confirmed Bellis' hire but declined comment on Vos. Neither Bellis nor Vos could be reached for comment.

"Some players seem to be taking an early holiday."--Aaron Poon, head of rates trading at JPMorgan in Hong Kong, commenting on the dearth of liquidity in the local interest rate swaps market. For complete story, click here.

State Street Research and Management, a Boston-based asset manager with USD40 billion under management, recently entered into credit default swaps as a means of managing so-called "vintage risk" in a true sale collateralized debt obligation it recently brought to market. Since the secondary market in asset-backed securities is relatively illiquid, issuers of CDOs of ABS have to purchase ABS in the primary market and as a result the reference pool consists entirely of securities of the same vintage, explained Ron D'Vari, managing director and head of specialty products and structured finance in Boston.

Taiwan Cement Corp., Taiwan's largest cement maker with total assets over TWD98 billion (USD2.8 billion), is considering entering interest rate swaps in anticipation of rate increases next year. "We want to take advantage of low rates in case they go up sharply," said S.C. Hwang, specialist in the finance department in Taipei. He noted that the company could hedge up to 40% of its TWD20 billion outstanding floating-rate debt via five-year interest rate swaps by the second quarter of next year. It is now looking at such transactions because it believes the interest rate cycle is now pointing to higher rates. "They've reached the bottom," he continued.

UBS has hired Ron Goldshmidt, a Latin American trading head at TD Securities in Toronto, in the new position of director, heading up Latin American trading in Stamford, Conn. The move is part of UBS' efforts to expand its global emerging market business, according to Kris Kagel, spokesman in New York. In his new role Goldshmidt will be responsible for bonds and derivatives, such as convertible currency swaps, with his initial focus being on Mexico. Goldshmidt could not be reached.

Egg Banking, a U.K. Internet bank, has entered into a foreign exchange swap to convert its first eurodollar USD350 million three-year note into a sterling-denominated liability. Ian Haywood, head of corporate treasury in London, said it had issued a dollar-denominated note in Europe because it attracted a wider investor base. Haywood declined all further comment on the details of the swap.

Brixton plc, a U.K. commercial property developer and investor, has entered into an interest-rate swap to convert a recent GBP150 million (USD254 million) 16-year bond into a floating-rate liability. Steven Owen, deputy chief executive in London, said it elected to pay floating in the swap because six-month LIBOR is currently around 4%, which is significantly lower than the fixed coupon of the bond.

--Howard Tiffen, senior portfolio manager in Van Kampen's Senior Loan Division, noting that investors should not let down their guard.

Get me a gong! At The Loan Syndications and Trading Association conference last week, several loan pros demonstrated that they were not only financial mavens, but comedians as well.

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.