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Credit Lyonnais is establishing a multi billion-dollar fund that will invest in the high-yield, investment-grade and credit-derivatives markets in the U.S. and Europe. The French bank, which does not currently have a significant presence in those products in the U.S., has hired three investment-grade traders from Deutsche Bank and a senior credit derivatives salesman from Merrill Lynch to manage the fund, according to fixed-income officials with knowledge of the group's plans. The fund, which will launch in May, will start with at least USD5 billion to build a global investment platform across all credit products, and will include trading desks in New York and London. The group will report to Omar Abukhadra, global head of credit markets and credit derivatives, who could not be reached. Once the group is in place, it is expected it will make additional senior hires, including analysts.

Dresdner Kleinwort Wasserstein is working on what will be the first hybrid securitization that provides investors with exposure to hedge funds and private equity returns. Investors would gain exposure to hedge funds for the first four or five years of the deal with the money being transferred to private equity afterward through bonds backed by the assets. Mehraj Mattoo, managing director and global head of the alternative investment group in London, said the problem with private equity investments is they take several years to start producing high returns as the capital is held on deposit until it is drawn down. This structure gets around that problem by investing the money in hedge funds until it is needed.

Fred Dubignon, global co-head of fx sales at Dresdner Kleinwort Wasserstein in London, has resigned and left the industry. One official said, "he has made his USD10 million and wants to spend more time with his family."

A host of major firms, including Goldman Sachs and Morgan Stanley, are reportedly sitting on substantial unrealized losses in their equity derivatives books as a result of dwindling implied volatility. Equity desks have been entering collars with customers since last year in which the banks are long calls and short puts, according to traders. Firms that did not hedge their positions are sitting on mark-to-market losses as a result of time decay. Players that have hedged their positions by selling futures are holding an increasingly asymmetrical hedge as the value of their option position diminishes. One head of equity derivatives said risk managers will start to force traders to close out the positions and realize the losses in the next three months if the situation persists. Officials at Goldman and Morgan Stanley did not return calls.

Dresdner Kleinwort Wasserstein's alternative investments group plans to hire two senior-level bankers within the next few months as it expands its product offerings. Mehraj Mattoo, managing director and global head of the alternative investments group in London, said he would look for professionals with experience of structuring derivatives on hedge funds.

Coronation International has launched a new fixed-income hedge fund and will be adding a convertible arbitrage fund and a closed-end fund in the next four to six weeks. Stuart Davies, who heads arbitrage hedge fund business development in London, said the firm is in the process of converting its main business from that of proprietary trading to a family of hedge funds, using capital from the proprietary trading operation, allowing the firm to attract outside capital as well.

Azam Mistry, director and head of risk management advisory for treasury and capital markets at HSBC in Hong Kong, has resigned. Market officials noted that Mistry is a well-known figure in the region for his role as a director for the International Swaps and Derivatives Association. Mistry declined comment.

ICAP will begin brokering trades for emission credits and renewable energy derivatives within the next few weeks. Currently the firm is putting contacts in place and as soon as prices are available will begin to broker its first trades, according to Katleen De Cock, weather and environmental derivatives broker at ICAP in London.

ING Financial Markets recently lost Singapore-based Mahmood Jumabhoy, head of financial markets for Southeast Asia, and Eric Lam, director of the structured products group, who resigned for what market officials attributed to lower than expected bonuses, which were paid out earlier this year. "Bonuses weren't up to par," noted a headhunter in Hong Kong.

JPMorgan recently hired Jason Sippel, director and structurer at Gen Re Securities in Tokyo, as a v.p. in the credit and rates markets group in Tokyo. He reports to Ashley Bacon, Asian head of rates markets in Tokyo, who said Sippel's role within the group is still under discussion. "We're still figuring out his position. He's a talented guy, there's a lot of jobs that he could do." He added, Sippel is an opportunistic hire and may focus on either fixed-income or credit derivatives products.

Moody's Investors Service has hired Dan Chen, an assistant v.p. in JPMorgan's global portfolio management and technology group in New York, to join its synthetic collateralized debt obligation ratings team. He joined the 17-member team two weeks ago and is filling a newly created position, according to Chen. He reports to Jeremy Gluck, head of resecuritization market value products.

Société Générale Asia and Barclays Capital Asia recently started marketing credit-linked notes with embedded interest-rate products for the first time in the region, because yields on traditional CLNs have fallen, according to officials at the firms. "The interest-rate component adds extra juice," noted an official at SG Australia.