Free content

Land O' Lakes hosted an investor conference call last Wednesday to clarify some of the numbers discussed during its second quarter earnings call. Before the conference began, listeners were treated to the customary elevator music while they waited. But when the conference call started late, call participants believed that the music was playing because someone had put the call on hold. "Hello," they said. "Is someone on hold?"

Turner Investment Partners is looking to add some 10% to its corporate allocation in its intermediate and core products to take advantage of attractive yields in the asset class. Roger Early, who oversees $750 million in taxable fixed-income assets, says it will take at least until the end of the quarter before the allocation shift is complete. He declined to specify the exact dollar amount of the trade, but says it will be less than $75 million, as many of the short-duration products carry little or no corporate exposure. The firm will finance the trade by selling Treasuries and agency debentures, which Early says have benefited from the flight to quality and are overvalued relative to other asset classes.

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.

ABN AMRO has recently relocated Frank McKirgan, head of Asian equity derivatives in Hong Kong, to a new role in London, according to Ali Ahmed, now-Asian head of equity derivatives trading in Hong Kong. Ahmed noted that he joined last month from Indosuez W.I. Carr Securities, where he was the Hong Kong head of equity derivatives trading, to assume responsibility for the trading desk. On the back of McKirgan's repatriation, ABN has restructured the desk by splitting his duties between the head of trading and Anthony Wah, head of marketing for Asian equity derivatives, noted Ahmed. McKirgan did not return calls.

Barclays Capital has hired Andrew Whittle, senior managing director of credit derivatives at Bear Stearns in London, as its European head of credit derivatives. This is a new role as previously the European credit derivatives team had reported directly to Vince Balducci, global head of risk finance in New York, according to a firm spokesman.

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.

"This is still open for debate."--Norah Barger, chairman of the credit risk mitigation subgroup of the Basel committee in Washington, commenting on the committee's stance on dropping restructuring as a requirement for regulatory capital relief. For complete story click here.

Credit-default swap spreads on Aon Corp., a Fortune 500 insurance broker, skyrocketed last week after the company announced the Securities and Exchange Commission was looking into its accounting practices and said it may have to restate earnings for the past three years. Midmarket five-year default swap spreads jumped from 130 basis points Tuesday to as high as 475bps before retracing to 450bps by late Wednesday in New York. "It opened up 200 bid/no offer, an offer came in at 300 and got lifted and it kept going up," said one credit derivatives trader in New York. "The market will punish any company that has a story with guys in badges involved," added the trader, referring to the SEC investigation. The company also announced it was shelving plans to spin off its underwriting unit. Aon shares fell to USD14.77 Wednesday from USD21.38 Monday, with a 52 week high of USD44.80.

Commerzbank and BNP Paribas are recommending bullish euro foreign exchange options trades to investors, taking the view that downward pressure on sterling and the yen will continue. Ian Stannard, foreign exchange analyst at BNP Paribas in London, said assets in Europe generally look favorable compared with other regions. "Inbalances in the U.K. economy continue to grow and there are signs that export manufacturing is starting to falter," he said, adding that Japan will be affected by the slow recovery in the global economy. The firm is taking a medium- to long-term view on the trend and suggesting three- to six-month euro calls against both currencies. For example, the firm is recommending a six-month euro call at JPY120.50, with an approximate price of 0.96%. Euro/yen was trading at JPY117 on Friday. This trade takes advantage of low implied volatility at 8.8-8.9%, which is close to implied vol lows seen in May of 8.6-8.7%, after reaching a high of 10.1% in June.

Credit-default swap spreads tightened across the telecom, auto and industrial sectors late last week as proprietary trading desks started to take profits on default swaps they had bought in the last weeks. Five-year protection on DaimlerChrysler tightened 20 basis points to 160bps last week. Traders said investors were selling positions they had put on at the start of the month when the car manufacturer was trading around 145bps. Five-year protection on Ahold also tightened 20 basis points to 145-165bps by Thursday morning from midday on Wednesday, while Cable & Wireless tightened 60bps to 320-350bps.

The cost of U.S. dollar/Canadian dollar options rose and risk reversals flipped last week amid strong buying interest in greenback puts/Canadian dollar calls. Foreign exchange options traders said vol rocketed because a firm, whom they declined to name, bought nearly a yard of one-month U.S. dollar puts struck at CAD1.57, likely for a client. Spot was at CAD1.5780 late Wednesday in New York, down from as high as CAD1.59 earlier in the week. One-month implied volatility rose to 9.6% after the buying action Wednesday from 8.8% Monday. Traders expected spot to move even lower, as 25-delta risk reversals flipped to 0.2 vol in favor of dollar puts/Canadian dollar calls, from 0.1 vol in favor of dollar calls/Canadian dollar puts on Tuesday.