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Bank of America has hired Tony Kay, head of non-Japan Asia credit derivatives trading at UBS Warburg in Tokyo, to oversee credit derivatives trading for the region. "He's a top-notch guy," said one market official. Kay is reportedly receiving a two-year guarantee of USD2 million per annum. "This sets a whole new benchmark for the market," the official added. However, another official said, "They're paying over the top." Kay could not be reached for comment.

Firms selling protection to structure synthetic collateralized debt obligations caused credit-default swap spreads on high-grade names to grind tighter on Wednesday morning. Traders said that there were at least two deals, Merrill Lynch's Nationwide Building Society CDO and one from BNP Paribas. The Merrill Lynch deal is a synthetic balance sheet CDO referenced to Nationwide's EUR1.4 billion (USD1.38 billion) bond investment portfolio (DW, 4/28). The average credit rating on the deal is A3/BBB plus. Officials at Merrill declined comment and officials at BNP Paribas did not return calls.

Deutsche Bank is looking to add a staff member in London as part of its push to structure hybrid products to hedge credit or bankruptcy exposure via equity and credit derivatives, according to a firm official.

Financial institutions faced with growing inventories of unsold synthetic collateralized debt obligations and increasingly skittish investors are turning to ever more novel structures to entice buyers. The new twists structurers are putting on CDOs include kickers to the mezzanine tranche, adding structured products to the equity slice, securing ratings for deals that would previously have been placed without a rating and even putting tranches in other asset-backed products.

Alcoa, an aluminum producer with more than USD20 billion in annual revenue, may enter an interest-rate swap following its recent two-part USD1.4 billion bond sale. William Plummer, treasurer in New York, said, "We are considering the fixed-versus-floating of this new debt issue because in the current market environment with a steep yield curve, floating is attractive." In any swap, the Pittsburgh-based company would seek to pay a spread over LIBOR and receive the fixed-rate coupons on the bond.

The cost of U.S. dollar/Japanese yen options rose a full percentage point last week as the dollar fell to JPY116.50 on Wednesday, its lowest level in more than a month versus the yen. Implied vol and the dollar tend to move inversely, as the long-term trend has been dollar strength and a move away from that implies broader uncertainty, traders said. One-month implied vol rose to 11.5% on Wednesday in New York, up from 10.5% on Monday, mirroring the greenback's fall from JPY119.50 earlier in the week, according to fx options traders.

Credit-default protection on auto giant Ford Motor Credit went on a see-saw ride last week, widening almost 40% at one point before settling down as the week progressed. All of this occurred despite the lack of negative credit news in what traders are calling yet another indication of the volatile credit environment. Instead, traders said it was a technical issue, rumored to be seller of short-dated Ford bonds. Midmarket five-year protection rose to 510 basis points over LIBOR from 380 basis points the previous week, setting a record wide for five-year protection on the credit. It later settled at 430bps late Wednesday in New York. "This is really a pristine name and that kind of move is unprecedented without any news," said one trader. Similar moves occurred in the cash market.

LG Card, one of Korea's largest credit card companies in terms of assets with KRW31.8 trillion (USD26 billion) in assets, recently entered a cross-currency interest-rate swap on the back of a three-year USD200 million U.S. dollar floating bond offering issued last week. "Our business nature is local--we don't want foreign exchange exposure," said Jae Gwang Soh, manager in the finance department in Seoul, explaining why the company converted the entire issue into won.

JPMorgan has hired Jason Li, interest-rate derivatives trader at Bank of America in London, in a similar position in Hong Kong, according to Aaron Poon, head of rates trading at JPMorgan in Hong Kong. Li will cover the Hong Kong dollar market when he starts next month.

Merrill Lynch has hired Yuka Tanaka, fixed-income structurer at Deutsche Bank in Tokyo, as a credit derivatives structurer in Tokyo, according to officials at the firm. Tanaka will primarily work on synthetic collateralized debt transactions and is a replacement for Hideyuki Kudo, who recently joined Dresdner Kleinwort Wasserstein as a senior credit derivatives structurer in Tokyo.

Manitowoc, a Midwestern industrial manufacturer with annual revenue of roughly USD1.2 billion, is "strongly considering" entering its debut fixed-to-floating interest-rate swap, according to Carl Laurino, treasurer and interim cfo in Manitowoc, Wis. He said the company expects to take advantage of current rates and convert a fixed-rate, high-yield bond it sold earlier this month into a synthetic floater. Converting the USD175 million deal would be the first time it has switched from fixed into floating, although it has used interest-rate swaps in the past to convert floating-rate debt into fixed-rate obligations. The company has about USD700 million in outstanding debt.

Merrill Lynch has hired Tim Apatu from Barclays Capital in London, as a director in the corporate fx sales group in London, focusing on U.K. corporate clients. He will report to John Langley, director in European issuer sales, according to a Merrill spokesman.