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Citigroup Asset Management, which manages E5 billion in fixed-income assets through its London-based group, at the last minute pulled its order for Deutsche Telekom bonds, which were issued late last month. "We were not impressed with Deutsche Telekom's arrogance of not writing down debt and not addressing bondholders' concerns. We had an order in there, but pulled it. Our analyst was of opinion it's one to avoid," says Denis Mangan, director and head of European fixed income. Instead, Citi bought Imperial Tobacco's new issue last week and plans to buy Renault paper once it hits the market. Salomon Smith Barney was one of the co-leads on Deutsche Telekom's E5 billion deal.

Investor's Management Group may look to increase its exposure to collateralized mortgage obligations with premium coupons, on the view that rising interest rates will lead to extension risk. Kathy Beyer, manager of $5 billion in taxable fixed-income, says the firm may add up to 3% of its $160 million Core Bond Composite fund, or $4.8 million, to the asset class, while reducing its cash position. Mortgage spreads on PACs were 100-125 over Treasuries last Tuesday, and Beyer says she expects those spreads to widen, as corporate bonds investors who have sought safety in mortgages gradually shift out of the asset class. An additional 20 basis points of widening would trigger the move, she says.

The new Fleet HomeLink commercials from FleetBoston Financial having been running steady over the past two weeks as the Red Sox and Yankees squared off in seven games in 11 days. An informal tally appears to have Jeter having more lines than Nomar, which isn't right because Nomar's stats are slightly better so far this year. It's wicked unfair.

Napoleon Rodgers, portfolio manager withAlpha Capital Management, says he is going to rotate 15% of the firm's portfolio, or $15 million, out of Treasuries into mortgage pass-throughs, as he expects mortgages will outperform Treasuries with the prospect of stable or slightly higher interest rates. There is no trigger for this move besides the anticipation that, although the Federal Reserve may not tighten this year, the recovery should cause long rates to move up relative to short rates, hence shaping the curve in a more positive slope, he says. As a result, mortgage products should perform well due to their negative convexity and offer additional yield pick-up, he says.

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 is expected to launch this week the first credit-linked note using the weightings of the iBoxx index, a European fixed income index jointly complied by seven market makers. The CLN is referenced to a portfolio of the index's 50 largest corporates by outstanding debt, according to officials familiar with the note. Officials at ABN declined comment.

BNP Paribas has hired Mark Alexandridis, head of credit derivatives at Gen Re Securities, as head of its North American credit derivatives business in New York, where he is in charge of all sales, trading and structuring within the region, according to a BNP official. Alexandridis started at the French bank last month.

BNP Paribas has lost three more of its equity derivatives professionals, this time to CDC IXIS Capital Markets and Banc of America Securities. Jason Megson, v.p. in single stock trading, and Michael Nevin, v.p. in equity derivatives sales, have joined CDC and Raj Malhotra, v.p. in index trading, has joined BofA. All have taken similar positions, according to officials familiar with the situation. The firm had already lost Jim Xu, an equity derivatives trader, (DW, 5/19) Kent Oz, head of financial institutional sales, (DW, 5/3) and Vuk Bulajic, head of U.S. equity derivatives (DW, 4/29).

Noranda, a Canadian metals producer with approximately USD4 billion in sales last year, is considering entering an interest-rate swap on the back of a recent bond deal to convert a fixed-rate liability into a floating-rate one. Michael Frilegh, v.p., treasurer in Toronto, said he would like to enter a swap where the company would pay floating and receive fixed. However, with yields on Treasuries and swaps so low, he is preferring to keep the liability in fixed-rate for now and may enter a swap in the coming months if rates increase.

CCF Capital Management two weeks ago entered into a one-year USD50 million (notional) interest-rate swap in which it receives a fixed rate of 2.34% and pays one-month U.S. dollar LIBOR. CCF, a member of the HSBC Group, was approached by a bank in London, which was looking to enter the swap, according to Christophe Besson, head of derivatives and futures in Paris. He said the counterparty, which he declined to name, may have been looking to hedge an underlying exposure. Besson declined all further comment.

Deutsche Asset Management Australia, the Antipodean fund management arm of Deutsche Bank with USD40 billion under management, is in the early stages of studying the possibility of purchasing its first synthetic collateralized debt obligation and boosting its investment in credit derivatives for its AUD5 billion (USD2.87 billion) fixed-income portfolio. "Credit derivatives are a good way to improve the diversification of the underlying portfolio," said Bill Bovingdon, head of fixed-income in Sydney.