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Voyager Asset Management will continue to reallocate assets to the spread sector, especially corporates, on the view that the drop in interest rates will add more fuel to the rally in the single-A and above corporate bond sectors, says portfolio manager Greg Poplett. Poplett, who heads a team running $7 billion, recently purchased a 10-year Bank of America deal, the 7.40% notes of '11 (Aa2/A), a trade he financed by selling 10-year Treasuries.

Principal Capital Management is considering bringing its MBS allocation up to an index-weighting of 35%, from its current underweight of 28%, a move that would add up to $320 million. Portfolio manager Lisa Stange, part of a team that manages a $4 billion "core-plus" portfolio, says a decision will be made when the April prepayment figures are released. She argues that once the figures are out in the latter part of May, a majority of eligible homeowners will have refinanced their mortgages, thus normalizing prepayment speeds. With the refi wave cresting, this will improve the technical situation in the current coupon sectors. She declines to speculate on what paper she would buy to bring her allocation up to a market weighting.

Mehraj Matto, co-head of fund derivatives at BNP Paribas in London, has joined Dresdner Kleinwort Wasserstein as head of fund derivatives. Matto will report to Robin Farrell, head of the alternative investments group in London. Farrell said Dresdner hired Matto to help with preparations to start writing options on the performance of hedge funds. It expects to structure its first hedge fund option within the next couple of months (DW, 3/19). Matto resigned last Monday and is expected to start in a month. Matto could not be reached. Stéphane Liot, the other co-head of fund derivatives at BNP Paribas, was travelling and could not be reached. Calls to a BNP Paribas spokesman were not returned.

Wells Fargo Bank is looking to hire one to two equity derivatives marketers/structurers over the next year in San Francisco. The three-strong trading, marketing and structuring team is beefing up to meet customer demand, said Hardy Hodges, head of equity derivatives in San Francisco. The group works with the bank's corporate client base, which consists of smaller and mid-sized corporates in the Western half of the U.S. Although it provides the full gamut of products, it tends to work mainly with hedging and monetization transactions, such as collars and variable pre-paid forwards, said Hodges.

Tony Kearney, a hedge fund currency marketer at J.P. Morgan Chase in London, has joined Credit Suisse First Boston as director of global account sales in the global treasury product sales group. Kearney will report to Rusty Elvidge and David Newman, co-heads of treasury product sales in London and New York, respectively, according to a spokeswoman. Kearney is expected to start next month.

Kjell Ekdahl, North American head of equity derivatives marketing at BNP Paribas in New York, has accepted a position at Robertson Stephens in San Francisco. A rival equity derivatives official noted that Ekdahl was the most senior member of BNP Paribas' equity derivatives marketing team, so his departure will leave a substantial void in that group, which may adversely affect the firm's ability to attract quality equity derivatives marketers. A spokesman for BNP Paribas confirmed that Ekdahl has left the firm, but declined further comment.

Dresdner Kleinwort Wasserstein is structuring capital guaranteed products with long-dated zero-coupon bonds in a novel twist designed to provide a fatter potential payout on the option component. Matthias Schellenberg, head of equity structured product sales for Germany and Austria in Frankfurt, said the issue price for a 30-year zero is approximately 20% of the redemption value whereas the price for a three-year zero is about 80% of the redemption value. By purchasing the cheaper 30-year zero, Dresdner can spend more on an option to provide upside participation.

Deutsche Bank is believed to have pocketed over EUR100 million (USD89.4 million) after reportedly squeezing repo traders in a massive interest-rate futures position. The German bank was able to take advantage of illiquidity in the cheapest-to-deliver bond that would have been used to settle a long futures position it entered, in a move that drew sharp criticism from some City rivals. Repeated calls to Deutsche Bank's trading desk and to spokespersons were not returned.

Dresdner Kleinwort Wasserstein is preparing to offer options on alternative investments within the next couple of months. Robin Farrell, head of the alternative investments group in London, said demand for these products has picked up recently because there is a greater impetus to invest in hedge funds in a bear market. The group already writes guaranteed notes on mutual funds and Farrell said it is the next step to offer the same products on baskets of hedge funds. Options on hedge funds are harder to structure than mutual funds because the underlying is less liquid.