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Andrew Feldstein, former managing director and co-head of North American structured products and derivatives marketing at JPMorgan in New York, is readying the launch of a credit hedge fund in June. The fund, which is yet to be named, reportedly will launch with assets of USD50 million and is predicted to grow to USD250 million by year-end. It will trade over-the-counter credit derivatives and adopt several credit arbitrage strategies, as well as invest in structured credit products. Feldstein confirmed his plans to launch a fund, but declined further comment.

Five-year credit-default protection on Ford Motor Credit tightened to 380 basis points last Wednesday from 460bps the previous week. The move came as a reaction to stronger-than-expected profits for the first quarter, said a New York-based trader. Protection on almost all autos moved in on the back of Ford, with a notable exception being protection on General Motors Acceptance Corp., which blew out Tuesday as the corporate warned it might not meet its earnings targets. Five-year protection on GMAC traded at 250bps Wednesday, out from 230bps two days earlier, said the trader.

Financial Security Assurance has started to review synthetic collateralized debt obligations again with an eye to reentering the guarantee market. Betsy Castenir, spokeswoman in New York, said the FSA is pursuing new business in the CDO market selectively, but declined further comment. The monoline pulled out of writing guarantees on CDOs last year, after sustaining losses, said market officials.

Norddeutsche Landesbank, a regional bank for the German states of Lower Saxony, Saxony-Anhalt and Mecklenburg-Western Pomerania, has entered an interest rate swap on a recent EUR1 billion (USD1.07 billion) bond offering to convert it into a floating-rate liability. Thomas Hofermann, syndicate manager at the bank in Hanover, said it entered the swap because it did not want to carry the interest rate risk for the 10-year maturity for the bond. The bank does not convert all fixed rate issues.

"Within 12 months, this will be a big market."--Stefan Armbruster, head of equity structured products for Germany and Austria at ABN AMRO in Frankfurt, commenting on the future of the retail market for structured credit instruments. For complete story, click here.

Goldman Sachs has reportedly lost USD5-7 million on a collateralized loan to an individual at a Taiwanese corporate after shares it held to back the transaction plummeted. The investment bank loaned an undisclosed amount to a senior official at Chou Chin Industrial through its private bank and accepted shares as collateral, according to a Goldman official. The shares plummeted from a high of NTD30.90 (USD0.89) on March 5 to NTD3.74 Wednesday after Kuo Pao-fu, chairman of Chou Chin, admitted last month to using company funds to drive up the stock price. Edward Naylor, a spokesman at Goldman in Hong Kong, declined comment.

HSBC, which has the largest dealing room in Hong Kong, moved around 50 of its 300-plus treasury and capital markets staff to a makeshift parallel trading desk Monday to ensure the firm can keep an operation running if the SARS virus infects the main trading floor. "We've put them on a separate floor," said Pierre Goad, spokesman. "We're also looking at further contingency plans, such as using locations in other countries," he added.

Lehman Brothers has hired Craig McCauley, head of global fixed income at BT Funds Management in Sydney, as head of emerging markets bond and currency sales in London. McCauley is taking a new position that has been added as part of the firm's increasing focus on marketing emerging market debt and currency products. He said he will be marketing both cash and derivative credit, fixed-income and currency instruments.

The delta of an option is frequently considered to be the same as the probability that an option will be exercised, i.e., the probability that the option will be in the money at maturity. There is, however, a difference, especially when it comes to long-dated options on volatile stocks.

Algometrics, a London-based alternatives investment house, is closing and has returned the remaining USD85 million to investors. Stephen Smith, founder and managing director in London, said the firm and its managed fund, Algometrics Ltd., is winding down because it was having trouble raising additional capital. "It had become difficult to make money in a systematic way," he said, adding that the fund was not making the 15-30% returns that hedge fund investors demanded before they would contribute funds, declining to comment on the funds' performance. The fund, which specialized in statistical arbitrage and other quantitative trading in equities and fixed income, moved all its capital into cash in January after it stopped trading in Europe.

Nick Sheppard, executive director of the institutional equity division at Morgan Stanley in Tokyo, is leaving the firm to take a sabbatical, according to officials at the firm. Sheppard reports to Shawn Bardong, managing director and head of trading in Tokyo. Bardong declined comment and Sheppard could not be reached. Officials continued that the existing staff will handle Sheppard's duties, declining further comment. Simon Locke, spokesman, declined comment.

The Royal Bank of Scotland has hired Neil Murray, single-name credit-default swap trader, and Colin Macintosh, leveraged funds salesman, both from Commerzbank Securities, to bolster its capital markets team. Stewart Booth, global head of credit trading at RBS in London, said the hires were part of the bank's expansion plans for capital market products.