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BondWeek is the leading news publication for fixed-income professionals, covering new deals, structures, asset-backed securities, industry and market activity.

BondWeek is the leading news publication for fixed-income professionals, covering new deals, structures, asset-backed securities, industry and market activity.

Five-year credit protection on automakers tightened last week, leaving many traders puzzled over the cause. For example, spreads on Ford Motor Credit moved in 15 basis points ahead of an announcement of weaker than expected sales figures and then a further 15bps after the announcement, noted one trader. Ford credit-default swaps traded at 180bps last Wednesday, in from 225bps the previous week.

Barclays Capital is bringing aboard K.J. Shin, derivatives trader at HSBC in Seoul, for its onshore Korean desk in a new marketing role covering short-term foreign exchange derivatives. "This is a new business for Barclays onshore," said Inseok Cha, director in the investment banking division in Seoul.

Barclays Capital is looking to set up a U.S. power trading desk early next year, according to DW sister publication Power Finance & Risk. Market watchers say the business will be based in New York and headed by Joe Gold, managing director and head of the firm's continental European power and gas business. Calls to Gold and Benoit de Vitry, global head of commodities, were not returned. Kerry Goodwin, spokeswoman in London, was unable to ascertain details by press time.

James Kennan, v.p. in currency option trading at BNP Paribas in New York, has left the firm. Kennan, who declined comment, is not yet thought to have joined a competitor.

BNP Paribas has hired Ebo Coleman, senior credit officer at Moody's Investors Service in London, as a structurer in its securitization group. At BNP, Coleman reports to Michael Donahue, head of securitization in London.

After months of wrangling the European Commission is expected to say derivatives can be used for limited borrowing and leverage in certain Europe-wide funds. This will be a boon for the derivatives industry, especially because it was feared that European regulators were attempting to tighten the rules. "This is what the industry was hoping for," said one equity derivatives structurer. Calls to the Commission were not returned by press time.

Derivatives houses have started buying protection on first-loss tranches of synthetic collateralized debt obligations they hold to offset risk they retained when issuing the senior tranches. Hedge funds have emerged as the main sellers of this protection. When first loss tranches of CDOs, which typically represent the riskiest 3% of a portfolio, were retained by dealers they were so out-of-the-money they did not have much mark-to-market volatility, noted Frank Iacono, senior v.p. in structured credit products at Lehman Brothers in New York. Record spread tightening in credit-default swaps over the past year, however, has moved the positions in the money and in turn made them vulnerable to spread volatility and changes in correlation, he said.

Michael Ice, former managing director and North American head of rates, sales structuring and marketing at UBS in Stamford, Conn., has landed at Dresdner Kleinwort Wasserstein as a managing director heading up the firm's financial institutions group.

One-month implied volatility on the euro/Hungarian forint leaped to 20% last Wednesday, from 8% the week before, while one-week volatility took an even wilder ride jumping to 25% from 7% in the same time frame. Government statements that the forint is not on target for integration with the euro started speculation that the central bank might allow the currency to devalue, noted one trader. Although the central bank has now denied this, the talk set the ball in motion and preceded a 3% interest rate hike that sent the currency into turmoil, he noted. Last Wednesday the euro traded at HUF274, compared with HUF263 the week before.