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Steven Jones, portfolio manager at St. Louis-based Missouri Valley Partners, says he will swap $20 million, or 20% of his portfolio, out of mortgage-backed securities and corporates if spreads on both credit products come in by 40 to 50 basis points, something he anticipates happening by year-end. He will invest the proceeds into Treasuries. The rationale is to take the Treasury allocation from its current underweight to market neutral.

Old Mutual Asset Management will consider buying Eon's next offering, if it comes at an attractive level. Richard Woolnough, the fund manager for the firm's £200 million corporate bond fund, he declined to say what that level would be. The firm recently re-entered the utilities sector buying RWE's last offering--a 6.375% of '13, which was priced at 105 basis points over gilts. "We had no exposure to utilities, because we knew new supply was coming, which was weighing on the sector. [The new issues] allow the fund to finesse its way back into the sector at attractive levels," says London-based Woolnough.

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.

The head of BNP Paribas' credit derivatives desk in Tokyo threatened to call in the regulator this 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 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 two weeks ago 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.

State Street global Advisors, which manages roughly USD35.5 billion in fixed-income assets, is considering entering the collateralized debt obligation market. "We're certainly looking at [CDOs], because of the fee potential," said Joe Marvin, head of U.S. bonds in Boston. Any deal is on ice for the time being, he added, because SSgA is waiting for the Financial Accounting Standards Board's clarification of consolidation criteria. By consolidation, he is referring to FASB's proposal to raise the minimum equity level held by third-party investors in CDOs to 10% from 3% (BW, 3/4).

ABN AMRO is predicting the Korean equity derivatives market is going to take off and plans to hire additional marketers to cope with the demand. "We're looking to increase our resources," said Frank McKirgan, head of Asian equity derivatives in Hong Kong.

Asset management (or managed) synthetic CDOs effectively securitize investment-grade corporate credit risk. A managed synthetic CDO combines the structure of a traditional asset management cash flow CDO with the cost-effective risk transfer of a static synthetic CDO. The result is a portfolio credit product that provides investors with an efficient investment strategy in an actively managed, diversified pool of investment-grade corporate credit. The advantage of managed synthetic CDOs for investors is the same as it is for other actively managed CDO products: a tailored exposure to an expert manager's performance in the selected asset class. Although the market has not yet converged on a standard managed synthetic CDO structure, the broad characteristics have been established.

Advance Auto Parts, an auto parts dealer in Roanoke, Va., is considering using interest-rate swaps to even the ratio of fixed-to-floating rate debt on its balance sheet, according to Sheila Stuewe, director of investor relations "Looking at possible swaps has become part of our constant review of our financing. We haven't decided on a schedule, but it is something we are looking at closely," Stuewe said.

Barclays Capital plans to expand its German corporate risk advisory business as more accounting rules drive cfos to consider the impact of hedging on the company's balance sheet. Martin Gueldenberg, director and German head of corporate risk advisory in Frankfurt, said the firm plans to hire one or two marketers with cross asset class experience. Most of the department's business revolves around interest-rate and foreign exchange risk, but equity and credit risk are also increasingly important.

Barclays Capital has hired Boris Loshak, v.p. in the mortgage strategy group at Goldman Sachs, as an agencies strategist in New York, according to Brad Stone, head of U.S. fixed income marketing and derivatives strategy. Loshak, who joined the firm about two weeks ago, is filling a new position created to meet the burgeoning U.S. agencies market, which Stone noted is becoming a large part of the U.S. high-grade market (DW, 9/9). He said the agencies business has nearly doubled over the last four years.