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Richard Cohen, head of Pacific Rim credit derivatives at Merrill Lynch in Tokyo and an industry veteran, has left the firm. He reported to Peter Walshe, head of credit products for the Pacific Rim in Tokyo. Market officials speculated that Cohen was let go as part of a global drive to reduce costs. Both Walshe and Takayuki Inoue, spokesman, declined all comment. Cohen could not be reached.

Merrill Lynch has hired Alan Galishoff, head of CMO trading and origination at JPMorgan in New York, in what is thought to be a new position as a proprietary mortgage arbitrageur. An official familiar with the move said Galishoff had been looking to shift from the client side to proprietary trading for several months. Galishoff, who was responsible for interest only/principal only (IO/PO) mortgage derivatives and collateralized mortgage obligations (CMOs) at JPMorgan, did not return calls.

Kmart's bank debt climbed up after the company released its plan of reorganization that estimated pre-petition lenders with $1.08 billion claims would receive roughly 40 cents on the dollar for their commitments. The bank debt was said to have traded in the 36 context, before ticking up to the 37-39 range with a few pieces changing hands. According to the bankruptcy documents, the plan represents a "compromise and settlement" regarding lender claims to guarantees provided by certain Kmart affiliates. The plan calls for the lenders to receive cash in lieu of equity in the reorganized company. "We believe that we have the general support of all the parties," said Ron Hutchison, Kmart's chief restructuring officer. A large portion of the cash distribution to the bank lenders will be provided by an investment by ESL Investments and Third Avenue Trust.

Greg Coules has joined J. P. Morgan Securities in a newly created position as a v.p. and distressed loan analyst, according to sell-side officials with knowledge of the hire. Coules was one of a number of high-yield professionals released from Morgan Stanley in November. He had spent three years at Morgan Stanley covering the broadcasting sector. Coules declined comment when reached at J. P. Morgan. He will report to Eric Rosen, managing director and head of the loan-trading group. Rosen declined comment.

Bank of America has hired Eric Ohayon, head of fx structuring at Lehman Brothers in London, to build up its fx structuring business in Europe. Ohayon said he reports to Alan Collins, head of the fx business in London. Ohayon replaces Greg Kaldor, managing director in foreign exchange sales in London, who moved over from a structuring to sales role last year, Kaldor said. Collins referred calls to Rhiannedd Jones, spokeswoman in London, who confirmed that BofA is beefing up its fx structuring presence, but declined further comment.

Bear Stearns and Merrill Lynch have reached just under the halfway point in filling Penn National Gaming's $600 "B" piece, however some investors were waiting on President George Bush's State of the Union Address to consider any bids into the credit. "There are big macro things going on this week," a banker explained, while another banker concurred that Bush's speech, assessing issues such as the prospect of war in Iraq and the state of the economy, have market players waiting to make investment moves. Both big and small tickets have rolled into the deal since its Jan. 23 retail launch, the banker noted. The $800 million acquisition credit's "B" piece stands at LIBOR plus 3 1/2%, and the lead banks do not expect any concessions at this point, the banker said, adding that the deadline is Feb. 10.

Crédit Agricole Indosuez is planning to double its pipeline of synthetic CDOs and bespoke tranches this year and will start marketing a USD1 billion synthetic transaction in the coming weeks. The transaction, called Momentum, will include synthetic exposure to high quality corporate names, according to Loic Fery, executive director and global head of credit derivatives and structures at CAI in London. The firm is retaining the equity tranche and offering four tranches rated between AA and BBB.

Deutsche Bank plans to offer an absolute return Islamic product as well as principal protected certificates that are Shariah compliant. The firm launched its first Islamic EquityBuilder Certificates last month and is now looking at structuring products with synthetic exposure to them, according to Shachi Shah, director of structured products at Deutsche Bank in London.

Jerry Woods, managing director in fixed income and 20-plus year veteran of Morgan Stanley in New York, will join Credit Suisse First Boston next month as global co-head of fixed income. An official familiar with the new structure said Woods will work alongside Jim Healy, executive board member and global head of the emerging markets group, who will be named as the other co-head. CSFB watchers said Jack DiMaio, head of fixed income for North America, and Trevor Price, head of the firm's rates business, were passed over for the role of co-head in favor of Woods. DiMaio and Price did not return calls by press time.

Deutsche Bank has structured what is thought to be the first Taiwan-dollar credit derivative and rival houses BNP Paribas, Credit Lyonnais and JPMorgan are in hot pursuit looking to market similar deals. The German bank sold a USD10 million equivalent Taiwan dollar-denominated credit-linked note referenced to a domestic name, according to an official at the firm. The instrument is similar to a deposit but does not contain a guarantee, he added, declining further comment.

OKO Bank Consolidated, the commercial banking arm of the Finnish OKO Bank Group that has EUR32.5 billion (USD34.76 billion) under management, is planning to make its first foray into credit derivatives. The bank will use credit-default swaps to hedge its loan portfolio and also is planning to become a dealer, according to Eero Ketola, an official in the group treasury in Helsinki. The bank does not plan to invest in credit-linked notes or structure collateralized debt obligations, he added.

The Council of Europe Development Bank has entered a cross-currency interest rate swap to convert a recent USD750 million bond offering into a synthetic euro-denominated floating rate liability. Arturo Seco, deputy funding manager in Paris, said the council entered the transaction because it converts all non-euro debt into its home currency and fixed-rate debt into floating. In the swap, the council is receiving the 3.75% fixed coupon on the bond and paying three-month Euribor plus a spread.