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Credit-default swap protection on Hong Kong's Hutchison Whampoa widened last week on the back of an impending USD1 billion bond offering. Five-year protection jumped to 210-220 basis points early last week from 195-210bps, according to Sonia Lee, v.p. and Asian credit trader at Credit Lyonnais in Hong Kong. Another trader noted that over USD50 million of default-swaps was traded around the announcement with a possible USD50 million more executed directly with clients. Typically, Hutchison trades about USD30 million per week, noted traders.

Deutsche Bank and JPMorgan recently structured a USD650 million bond for Korea Electric Power Corp.--the first bond in Korea on which a credit-default swap was written to reduce the cost of funding. The power company saved about KRW27 billion (USD22.5 million) by writing credit protection on the back of the bond offering, according to a KEPCO official. Credit traders at rival firms said it is likely that there is some degree of cash collateral on the back of the default swap to offset the correlation risk of a Korean company writing protection on its sovereign.

"The role is looking at structured credit connections and delivering these products to different types of institutions," Falk said. He reports to Brian Reid, managing director and head of the institutional client group in New York. Reid said Falk's background on the ABS side will be instrumental in structured credit.

Exelon has decided to exit weather derivatives, emissions, coal and congestion trading after designating these markets illiquid, according to market officials who have spoken to the company. As a result of the decision it has let go several staff, including Peter Frantz, head of weather derivatives in Kennett Square, Pa. Calls to Frantz were referred to Ben Armstrong, a company spokesman, who said Exelon Generation continues to actively trade the commodity markets. He was unable to comment on Frantz or the four markets the company is exiting. Frantz could not be reached.

Dresdner Kleinwort Wasserstein plans to start selling structured hedge fund notes through syndicates of firms to increase the size of transactions. "This will take the fund derivatives market to a new level," said Mehraj Mattoo, managing director and global head of alternative investments in London. He predicted that a syndicated note could be around EUR200 million (USD195 million), which is four times the size of a typical private placement.

Fitch Ratings plans to move its Italian structured finance team to Milan on Jan. 1. Patrizia Lando, senior director and head of the Italian structured finance team in London, said it is moving the team because of the increasing importance of the Italian market. "There needs to be someone there to explain the deals to investors and be close to the clients," said Lando. The move follows the increasing independence of Italian structuring desks, explained Lando, adding that previously Italian firms would work with a London based investment bank to structure the deal and that the investment bank would chose the rating agency. But, now most of the decisions come straight from Milan.

Axiom Investment Management, a Hong Kong-based asset manager with USD70 million under management, is considering investing in equity-linked notes for its USD7 million emerging markets hedge fund in the coming months, according to Jess Au, analyst in Hong Kong. The fund has used equity-linked notes and over-the-counter options in the past but focuses primarily on long/short equity plays, noted Au. She continued that if the Hong Kong market turns around in the coming months, it will consider investing in bullish equity-linked notes to capture upside gains on single-stock domestic names. Au declined to elaborate on specific products.

Hedge funds have tripled their share of the credit derivatives market in the last two years, according to a draft of the British Bankers' Association's 2002 survey of the credit derivatives market, a copy of which was obtained by DW. In addition, banks, which made up nearly two-thirds of the market at the end of 1999, now only account for half and are predicted to total a mere 47% in 2004. The survey was conducted in London, but looked at firms' global portfolios. Officials at BBA declined comment.

HSBC has issued a USD1 billion synthetic CDO referenced to a portfolio of investment-grade corporate credits. Rick Ziwot, managing director and head of structured credit products at HSBC in New York, said the CDO, dubbed the Tranched Investment Grade Enhanced Return Securities or TIGERS transaction, was split into six tranches.

JPMorgan has reorganized the flow products desk within its risk transformation group to give it a global focus. Stephen Stonberg, managing director and head of European credit derivatives marketing in London, and Andrew Palmer, managing director and head of U.S. credit derivatives marketing in New York, will each continue to run the risk transformation groups regionally, but Stonberg will be responsible for funded flow products globally and Palmer will be responsible for unfunded flow products globally, Stonberg said.

Hypovereinsbank, which manages approximately E6 billion in government bonds and pfandbriefes, will add new government bonds on the view that increased issuance of two- to five-year bonds will lead to a flattening of the yield curve. Christian Schablitzki, head of HVB's bond trading unit, says governments affected by recent floods will have to raise cash on the debt markets.