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DWS Investments is seeking to increase its exposure to corporate bonds. In particular, the media sector appears very cheap says Xueming Song, Frankfurt-based portfolio manager of the firm's $420 million dollar portfolio, who is looking to add AOLTimeWarner's 10-year benchmark bond. The 6 7/8% of '12 global bond has widened roughly 100 basis points to 260 over Treasuries in the past month. Song says he will buy AOL once it widens to 280-290 over. "If you drop AOL out of AOLTimeWarner, there are still good medium- to long-term fundamentals," he says.

When asked about the recent moves of Martin Pryor and Joe Wilson of J.P. Morgan to Salomon Smith Barney and Walter Levitch of Salomon to Goldman Sachs on trader quipped, "If we are not trading assets, we're trading people."

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.

Bob Alley, portfolio manager with AIM Advisors in Houston, says that he will swap 7% of the fund's portfolio, or $175 million, out of corporates into mortgage-backed securities over the next quarter. He anticipates that MBS will offer more protection in a rising interest rate environment due to their negative convexity. There is no particular trigger for this move, besides the widely anticipated Federal Reserve tightening action later on this year, which will flatten the curve, says Alley. He adds that his strategy also aims at reducing duration and giving up some convexity for more yield and less volatility.

"This is just in the thinking process." - Diego Wauters, executive director and global head of insurance and weather derivatives at Société Générale in London, commenting on the possibility of structuring a collateralized fund obligation referenced to its weather and catastrophe risk hedge funds. For complete story, click here.

Derivatives Week provides exclusive intelligence on new structures and industry activity worldwide in the over-the-counter derivatives market.

Emanuel Derman, managing director and head of the quantitative risk strategies group in the firm-wide risk department in New York, is leaving Goldman Sachs next month. Derman is "one of the most prominent quantitative analysts in the options area," according to Andrew Harmstone, head of European derivatives and quantitative research at Lehman Brothers in London. Derman also won the International Association of Financial Engineers' coveted Financial Engineer of the Year award in 2000.

BNP Paribas has hired Kara Paik, a consultant at McKinsey & Company in Chicago, as a marketer in its equity derivatives group. Paik, who joined the New York office about three weeks ago, is filling a newly created position, according to a firm spokeswoman.

The head of BNP Paribas' credit derivatives desk in Tokyo threatened to call in the regulator last week after competitors allegedly frontran a convertible bond issue by taking positions in the credit-default swap market. The problem occurred when dealers piled into the credit market two weeks ago to buy protection on Fujitsu before it became widely known that the company was about to issue a convertible bond. Stephane Delacote's complaints were sparked when credit-default swap volumes on Fujitsu increased three-fold in anticipation of a convertible bond offering (DW, 5/13). In a Bloomberg message sent to the major market makers and obtained by DW, he said, "This heavy trading reflects leaks of information and unfair trading." The message continued "we unfortunately will have no other choice than alerting regulators of any massive and unusual trading before the official announcements of a new CB issue." Delacote declined to comment on the matter. For full text click here.

BNP Paribas is expanding its New York foreign exchange institutional sales team, according to Nigel Babbage, global head of currency options in New York. Babbage said the move is aimed at meeting the rapid growth of the hedge fund market in the U.S. BNP plans to hire two or three senior marketers by year-end.

Bank of America is planning on consolidating its Asian credit derivatives trading operation in Tokyo in the coming months, according to Kenichi Tatsuzawa, head of global markets in Tokyo. "We are trying to centralize the trading operation," said Tatsuzawa, adding, "Traders should sit together, creating synergies for the team." The firm is looking to relocate Nick Jones, v.p. of credit trading in Hong Kong, who handles trading for the Asian region, to Tokyo in the coming months. Jones declined comment.