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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.

Banc of America Securities has placed the firm's high grade bond and credit derivatives business lines under one head and is planning a principal finance unit as part of an overhaul of its fixed income division. Principal finance is the hottest area of the structured credit arena, with several firms, such as Merrill Lynch (DW, 8/3), setting up desks. Market officials speculated that BofA's motivation for setting up the desk is to take advantage of the ripe secondary CDO market. Jeff Hershberger, spokesman in New York, confirmed the reorganization.

Ken MacKenzie, head of U.S. equity derivatives trading at Citigroup Capital Markets, has left the firm. MacKenzie, who could not be reached, is not yet thought to have joined a competitor. Bret Engelkemier, head of index options trading in New York, has taken on MacKenzie's responsibilities in addition to his existing role. Engelkemier said he is excited by the new role and sees a lot of market potential to develop the firm's trading presence and sign new clients.

Deerfield Capital Management is planning to issue a collateralized debt obligation of structured finance assets, and UBS Securities is underwriting the transaction, according to sell-side and rating agency officials. They said Chicago-based Deerfield, which was an active issuer of CDOs referenced to corporate credits but has not been as active in using structured finance assets as underlying collateral, is attempting to raise cash from investors to fund USD300 million in CDO liabilities. It will be backed by a mix of investments in various asset-backed sectors. Marketing on the transaction, dubbed Wolf Creek CDO, began late last month. The deal is expected to be priced later this fall.

Sean Mullen, senior marketer in equity derivatives, and David Himmel, high-net-worth salesman, have quit Commerzbank Securities in New York. Separately, a trader specializing in convertible bond-based trategies has returned. Himmel reported to Sam Gottesman, regional head of derivatives sales. He referred calls to Ed Mitchell, spokesman in New York, who declined comment. Mullen reported to Kumar Doraiswami, head of institutional sales, who did not respond to messages. Neither Mullen nor Himmel could be reached.

Crédit Agricole Indosuez has hired Alec Yin, interest rate derivatives trader at BNP Paribas in Tokyo, as a derivatives structurer in Hong Kong. Yin said he now handles structuring for interest rate and foreign exchange related products. He reports to Eddie Lee, head of fixed income in Hong Kong. Lee did not respond to messages.

Deutsche Bank has transferred Insuk Jung, head of trading in the global markets group in Seoul, to its Singapore hub Jung said he will take a regional fixed income derivatives trading role but declined further comment. He reports to Bryan Yap, co-head of emerging markets Asia for fixed income and derivatives trading in the Lion City.

One-month dollar/yen implied volatility shot up to 12.94% last Wednesday after settling down to 10.83% going into the weekend. The week before implied volatility had rocketed to 12.46% from around 10% after a statement from the Group-of-Seven most industrialized countries about exchange rate flexibility (DW, 9/29).

Dresdner Kleinwort Wasserstein is planning to structure what would be the first collateralized fund obligation referenced to an index of hedge funds. The CFO would reference one of the hedge fund indices, such as HFRX or Morgan Stanley Capital International, which investors can replicate, according to an official. "It's just a question of time," noted the official. Mehraj Mattoo, managing director and global head of alternative investments in London, declined comment.

Dresdner Kleinwort Wasserstein has started selling structured notes that reference German Bund/swap spreads to investors who believe the European economic recovery is just around the corner. A typical note pays a fixed coupon for the first two years and then switches to leveraged exposure to the Bund/swap spread, according to Achim Beck, managing director and head of derivatives marketing for Germany and Austria.

Foreign exchange investors are flooding into euro calls/dollar puts with reverse knock outs as the euro strengthens against the ailing U.S. dollar. One New York-based trader explained that purchasing the options gives clients a low-cost exposure to the single currency's surge.