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"This year was an aberration."--Fergus Gilbert, head of credit trading at the Commonwealth Bank of Australia in Sydney and chairman of the Australian Financial Markets Association's credit derivatives committee, explaining the reason for the fall in credit derivatives volumes in Australia. For complete story, click here.

Deerfield Capital Management is structuring a USD1 billion private synthetic collateralized debt obligation, which will be one of the first synthetic CDOs not to include restructuring as a credit event. One CDO investor expects CDOs without the restructuring trigger to move into the mainstream in the U.S. over the coming year.

Five-year credit-default swap spreads on U.S. retailer Sears Roebuck blew out last week, precipitated by credit concerns voiced by the firm during an earnings call. Five-year default swaps were trading at around 380 basis points last Wednesday, having gone as wide as 430bps earlier in the day, and up from 290bps where they were sitting before credit concerns were raised.

The cost of euro/dollar options fell last week as spot settled into a range between USD0.97-0.98. One-month implied volatility fell to 7.9%, down from 8.75% the week before. The options market has seen a lot of selling over the last few weeks with volatility approaching its lowest level since April or May, noted one trader in New York. Volatility in the equity markets isn't feeding through to the spot market with speculative investors, including hedge funds and bank proprietary desks, selling options as a result, added the trader.

WestLB has snared David Wagner, head of derivatives marketing at CIBC World Markets in New York, as an executive director and head of derivatives sales. He will report to James McPartlan, executive director, when he starts today.

DG Capital Management is looking to add but will hold off to its corporate bond allocation until there are signs the global economy is back on its feet and more companies begin to post better earnings news. "We want to see more positive numbers from companies, like [International Business Machines] posted recently," says Peter Lockhofen, senior portfolio manager, who manages E3 billion in Frankfurt. He declined to say how much more of the portfolio potentially could be reinvested in corporates.

Source development? Or is it possible that one LMW reporter misunderstood the concept of breaking the ice? As the Loan Syndications and Trading Association conference had just gotten underway last Tuesday, one LMW reporter spilled ice-water on the speech that Eric Chilton of Barclays Capital had prepared as a moderator for a panel on recent LSTA initiatives. Thankfully, it wasn't written in ink and the discussion went off without a hitch.

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.

Segall, Bryant & Hamill is seeking to add $50 million in 30-year Fannie Mae and Freddie Mac 6% and 6.5% pass-throughs with low gross weighted average coupons. Jim Dadura, portfolio manager of a $1.15 billion taxable fixed-income portfolio, believes a great deal of prepayment risk is already priced into the securities. To raise assets for the purchase, the money manager will sell Treasury and agency securities of less than five-years in maturity on the view that the short part of the Treasury curve will not appreciate further. Segall, Bryant has already bought close to $20 million of the bonds, using new cash, pay-downs and agency debentures.

Prescrott Crocker, high-yield portfolio manager at Boston-based Evergreen Investments, says he will increase the firm's defensive bond allocation by $250 million, or 10%, on the view that he does not expect a traditional cyclical recovery ahead but rather, a period of very slow growth. He says that in such an environment, his strategy will be "cautious" and centered on picks from the consumer non-durable, retail and service sectors. He will finance the bonds through the sale of cyclical names for the same amount. There is no trigger for this move.

Barclays Capital plans to bolster its New York credit-default swap trading desk as part of a global effort to beef up its credit derivatives capability. The hiring is spearheaded by Spencer Jesner, director and head of U.S. credit-default swap trading, who recently joined from JPMorgan. "My brief is to build up the team," said Jesner. Although no timeframe has been set to make the hires, Jesner noted that the longer the firm waits the more expensive the project will be, because firms are nearing bonus season.