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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.

Commerzbank Securities plans to hire marketers, traders and structurers in the U.S. to work with corporate clients on risk intermediation trades. Sam Gottesman, head of derivatives and fixed income sales for the Americas in New York, said the firm is hunting flexible staffers who can work across the disciplines of equity, credit and convertible bonds as demand dictates.

Commerz Securities has hired Jarl Smidt-Olsen, equity derivatives trader at Mizuho Securities in Tokyo, and plans to groom him as a replacement for Patrick Sollinger, former head of index trading in Tokyo, who left earlier this year (DW, 4/25). Neil Brazil, spokesman at Commerzbank Securities in London, confirmed the move, but declined further comment. Smidt-Olsen, who is a six-year veteran of the Japanese market and has also worked at JPMorgan in Tokyo, declined comment.

Commerzbank plans to sell hybrid structured notes in Asia for the first time in the coming months. "With the low interest rate environment, we're going to push investment products harder next year," said Mike Plant, senior dealer in Hong Kong. The notes will combine interest rate and credit derivatives.

Henderson Global Investors, an international asset manager with USD149 billion under management, is considering using interest rate and credit derivatives in Asia for the first time from its newly minted fixed-income desk in Singapore. "These are ways to pick up performance where appropriate," said Tim Swadling, associate director of fixed interest in Singapore. Swadling transferred from the U.K. last Monday to establish the fixed-income operation.

Five-year credit protection on U.S. consumer finance firm Household International fought back to stand between 500-540 basis points last Wednesday, down 125bps on the previous week and recovering from a high of 900bps on Oct. 24. Equity and corporate bond rallies, combined with the effects of several collateralized debt obligations being issued, have tightened spreads, noted one trader. Anticipation of another interest rate cut in the U.S. has also peaked expectation of a continuing equity rally, which in turn has influenced spreads inward.