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The European structured finance market struggled this week under the weight of deals waiting to be launched before the end of the year. Investors and bankers have begun to voice concerns about the volume of paper that will need to be absorbed. "It is very crowded and this will have an impact on deals getting out - it is a buyer's market," said one London-based syndicate official. "Nobody wants to go into year end significantly long on primary but you have to be level headed about it."

ABN Amro, Banca Nazionale del Lavoro, Citigroup/SSSB and JP Morgan have begun marketing a Eu6.6bn securitisation for the Republic of Italy, one of the largest ever transactions in the European structured finance market. Originally mandated in early summer, the deal was expected to total around Eu3bn, but was doubled after a ruling by the European Union's statistics arm Eurostat forced Italy to reconsolidate the previous SCIP deal, worth Eu2.3bn.

ABN Amro this week brought an unusual mortgage pool to the securitisation market with the launch of a Eu217m transaction backed by loans originated by the Municipality of the Hague. Most of the borrowers are civil servants, offering investors unique exposure to strong collateral. The transaction was in the market for a short period as investors snapped up a unique opportunity.

Salomon Smith Barney was rumored to have traded $20 million of WorldCom bank debt this week with the paper jumping from the low teens into the 22 1/2 to 23 1/2 range. This follows the release of promising numbers in its latest monthly operating report, including EBITDA of $416 million. One trader noted that recent reports indicating that the company would be sold at the end of the bankruptcy process have also contributed to the boost. "If you do the math, the recovery value could be as high as 60," he said. Calls to WorldCom were not returned by press time.

Market professionals in Australia are furious over the government's proposal to buy back its debt, fearing the damage it will do to the interest rate swaps market. At first sight proposing that swaps become the risk-free benchmark looks like a gift for the instruments, but market professionals warn that removing the underlying liquidity could damage the AUD2.6 billion (USD1.46 billion) swaps industry.

Bank of China International, the investment banking arm of the Bank of China, has recently begun trading and marketing equity derivatives. "We've launched our Hong Kong platform," said Warren Kwan, head of equity derivatives in Hong Kong.

Banks, including Deutsche Bank, Dresdner Kleinwort Wasserstein and Rabobank, are looking at using carbon emission derivatives to reduce the cost of project finance loans. The firms would strip out the carbon credits and then either sell them as forwards and options or use them as a revenue stream for the loan. Justin Mundy, senior advisor in the global markets group at Deutsche Bank in London, predicted it would be offering these loans within a year. The major users will be power generators, oil refiners and heavy industry, according to Steve Drummond, ceo of emissions broker CO2e.com in London.

"We are agnostic, we will look at both cash and synthetic. What we are looking for is the best structure."--Mark Anson, cio of CalPERS in Sacramento, Calif., commenting on the firm's plans to invest in the equity tranche of a CDO. For complete story, click here.

Bear Stearns has hired Maurizio Raffone as a senior collateralized debt obligation structurer in London. Raffone, who joins from a similar position at Deutsche Bank in Tokyo, reports to Mark Moffat, managing director and head of the European CDO group in London. Moffat did not return calls.

British Gas Trading, a subsidiary of Centrica, has entered a GBP40 million (USD62.5 million) multi-season winter weather hedge that uses a daily collar structure, rather than the more traditional heating degree-day index, to determine season-end payouts. Gearoid Lane, head of electricity supplies at Centrica, said the collar structure allowed coverage to be more concentrated in particular high-risk months, such as January. "We were able to sculpt the coverage much more to our risk," he added. One weather official said collar structures are gaining in popularity because of that flexibility.

The California Public Employees' Retirement System plans to make its first investment in CDOs in the coming months. CalPERS, the U.S.' largest public pension fund, with assets totaling approximately USD136 billion, will likely invest USD25-50 million before year end, according to Mark Anson, cio in Sacramento, Calif.

Chubb Financial Products has hired Isabelle Bourdeau as director in U.S. marketing in New York, a newly created position. Bourdeau will focus on marketing and origination of deals, according to Matt Cooleen, executive v.p.-new product development and origination in New York. Previously Chubb staffers have had a broad range of responsibilities due to the small size of the firm. As the firm grows it is now recruiting specialists to focus on more specialized areas of expertise, with marketing and origination now being separated from product development.