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NationsRent, an equipment rental agency, is considering converting a recent USD225 million fixed-rate bond into a synthetic floater. John Scherer, treasurer in Fort Lauderdale, Fla., said it may enter a swap as a means of obtaining better yield from the debt. The huge number of homeowners refinancing their mortgages has caused mortgage firms to enter swaps pushing out spreads and making it more advantageous for corporates to hedge bond issues (DW, 9/4).

"We have become a synthetic asset manager."--Yassine Bouhara, global head of equity derivatives at Deutsche Bank in London, commenting on the firm's joint-venture with DWS. For Complete story, click here.

SG Corporate & Investment Banking, JPMorgan and Citigroup have started to offer instruments in Europe that allow investors to punt on the volatility of a stock, the relative value of two stocks or a series of stocks against an index, without the hedging problems associated with using options.

Nick Senn, head of fixed income debt capital markets at WestLB, has joined New Smith Financial Solutions as a partner. Senn said, "I will bring more of a focus on portfolio management, risk and trading." The firm is an independent boutique specializing in risk management advisory, such as selling non-core assets. It was set up earlier this year by former Merrill Lynch professionals T.J. Lim, ex-global debt capital markets coo, Glenn Barnes, former European head of structured credit, and Kevin Krespi, ex-head of debt for the Pacific Rim (DW, 7/7). The trio worked with Senn at UBS in the mid to late 1990s.

The delta of an option is the change in the value of that option for a given move in the price of the underlying asset. Because an option's delta is always less than one (in absolute value), it follows that for a given change in stock price, the option value will move accordingly for a smaller amount. This seems to contradict the general perception that options are leveraged instruments. Just as delta is the appropriate hedging ratio, however, another Greek letter lambda is the more appropriate leverage ratio for options, which incorporates both the delta factor and the gearing factor.

The International Swaps and Derivatives Association is planning to set up a Tokyo-based working group to focus exclusively on the growing role of a computer language created for the securities industry. Masahiro Hosomi, general manager of the business development office in the structured products division at Mitsubishi Securities and an ISDA board member, said it will likely be up and running early in the new year. Hosomi will spearhead the effort.

Five-year credit default protection on auto makers spun out last week with one of the biggest moves coming from DaimlerChrysler after the corporate posted weaker than expected earnings on Tuesday. The German giant traded 30 basis points wider on the week, blowing out to 130bps last Wednesday, said a New York-based trader. Widening on the name was further provoked by Standard & Poor's slashing its rating on the firm to BBB, from BBB plus, and assigning it a negative outlook, he said. Ford Motor Credit, meanwhile, continued its volatile ride with protection on the name blowing out to 270bps, from 210bps the previous week. This is a huge move for a credit as large as Ford, the trader added.

The question was where does the trading term "axe" come from?

--Janet Tavakoli, President of Tavakoli Structured Finance, on FIN 46.

HSBC has hired two senior foreign exchange executives to head its emerging market options and corporate and institutional structuring business. Vincent Craignou, head of global fx options at ING in London, will be a director and global head of emerging market options, while John Bradley, v.p. in fx options at AIG Trading Group in Greenwich, Conn., joins as head of corporate and institutional fx derivatives structuring for the Americas in New York.

The huge potential of the mainland Chinese derivatives market was a major talking point at the International Swaps and Derivatives Association's Asia-Pacific Regional Conference Monday. One of the most significant developments is an opening up of which firms can trade derivatives. How-Chih Lee, director of fixed income and credit structuring at Credit Suisse First Boston in Hong Kong, said, 'Following the introduction of new derivatives measures, foreign banks will be able to apply for derivatives licenses.'

BondWeek is the leading news publication for fixed-income professionals, covering new deals, structures, asset-backed securities, industry and market activity.