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Landesbank Schleswig-Holstein Girozentral (LB Kiel) has launched a $937m synthetic collateralised debt obligation (CDO) backed by a static portfolio of US and European CDOs and asset backed securities. The transaction, Baltic Star, was arranged and lead managed by Merrill Lynch under the Argon Capital plc name, which was first used in August.

BELGIUM KBC Financial Products is preparing its second managed synthetic collateralised debt obligation via HSBC and KBC Bank. The Eu1bn Broad Street Finance plc offers Eu93.5m of credit linked notes and transfers exposure to a portfolio of European and North American investment grade corporate bonds and loans.

Dresdner Kleinwort Wasserstein will next week launch a unique securitisation of regional employment contributions for over 2,000 Sicilian companies. Conca d'Oro Funding will issue a single tranche bond worth around Eu148m, rated A- by Fitch with a legal maturity in November 2008. The paper should come in the 50bp area over Euribor with a 3-1/2 year average life.

Spanish mortgage backed spreads held firm this week as Ahorro Corporación Financiera, Crédit Agricole Indosuez and CECA launched a Eu403m securitisation of residential mortgages for four Spanish savings banks. Despite the stream of supply due from Bancaja as well as programmes such as Rural Hipotecario and TdA, the deal was priced at the wide end of guidance of 23bp-24bp for the Eu390m triple-A tranche, which has a five year average life while the Eu12.1m single-A bond came at 57bp with an average life of 11.5 years. The bonds have legal maturity in October 2035.

Online bank Egg Banking plc has launched its debut securitisation of UK credit card receivables, a £500m equivalent transaction lead managed by Deutsche Bank. Credit card transactions have encountered a tough audience in the European market in recent weeks. Earlier this month a seven year offering from MBNA came at 25bp. A week earlier the second issue of UK cards from Capital One Bank offered five year triple-paper at 27bp.

Fin-Eco Banca, part of the Capitalia Group, this week closed a Eu408m securitisation of first lien residential mortgages. Arranged by MedioCredito Centrale with CDC IXIS as joint-books, the deal marks a return to Italian RMBS after issuance peaked in the asset class in the first quarter this year.

ABN Amro Bank this week successfully opened its campaign to build a European market for fixed rate, passthrough mortgage backed securities. The bank's Eu550m securitisation of its Dutch residential loans, led by ABN Amro and Deutsche Bank, had aroused curiosity and some scepticism among European asset backed specialists since EuroWeek revealed the scheme in mid-May.

Commerzbank AG this week launched its Eu1.5bn synthetic securitisation of corporate loans under the KfW sponsored Promise programme. Promise-C 2002-1 followed the typical Promise structure, under which German government agency KfW sponsors the credit risk transfer of loans to small and medium sized companies. The scheme was devised to increase capacity for lending to Germany's large number of SMEs.

OM Group's bank debt dropped 18 points to the high 70s this week after the Cleveland-based specialty chemicals maker posted terrible results. "It's gone from being a par name to distressed territory in a couple of days," said one trader. After the disappointing results, the tough market conditions for cobalt is expected to hit operating results going forward, and so OM is planning to implement aggressive cost reductions and sell off non-core assets, according to a company release. Calls to a spokeswoman for OM were not returned. Credit Suisse First Boston, National City Bank and Credit Lyonnais are the lead, administration and documentation agents, respectively, on the credit. The loan consists of a $600 million "B" piece and a $325 million revolver.

Over-the-counter options referenced to dollar-denominated American depository receipts on Asian equities have gained momentum in recent weeks. "As the focus on pair trading has increased, people are looking at other forms of arb," said Sajeev Sirpal, managing director and head of Asia at KBC Financial Products in Hong Kong. The move is prompted by firms increasing their proprietary trading activities in the light of falling customer flows and directionless markets.

ABN AMRO plans to build up its total-return swap activities in the U.S. by creating more exotic products with longer maturities. John Haggerty, director in credit derivatives, global financial markets in New York, said the firm will likely hire sales professionals, and possibly traders, to help develop the business line in the short to medium term.

The Australian credit derivatives market has bucked a global trend and shrunk over the last year. Last week's Australian Financial Markets Association's survey showed credit derivatives volumes were down about 20% to AUD22 billion (USD12.1 billion) from AUD28 billion. In contrast the British Banker's Association's recent survey showed the global market had grown from USD1.189 trillion to USD1.952 trillion over the same period (DW, 9/23).