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The cost of credit-default protection on Verizon Global Funding, a funding arm of Verizon Communications, fell late Wednesday after the company reported better-than-expected second-quarter earnings. But later in the week protection widened slightly again as investors continued to express fear of future credit events in the telecom sector. Mid-market five-year default swap spreads tightened to 340-345 basis points by mid Thursday in New York from 430bps before the earnings were announced on Wednesday, according to traders. By Friday, five-year mid-market protection had widened slightly to 355bps.

Pope & Talbot, a pulp and wood-chip producer with annual revenue of roughly USD500 million, is considering entering an interest-rate swap to covert a fixed-rate liability into floating, said Maria Pope, cfo in Portland, Ore. The interest comes on the heels of a bond offering last month, in which it raised USD60 million in 11-year notes with a fixed coupon. "We have not [done any swaps] and we're considering it," she said, noting the company is talking to potential counterparties about entering a swap. Pope & Talbot has used interest-rate swaps in the past, she added, declining to say what factors would influence its decision-making.

The cost of dollar/yen options dropped sharply last week as the dollar reversed weeks of losses versus the yen, in line with a turnaround in U.S. equity markets. Implied volatility fell, with the one-year rate dropping from roughly 9.1% from 9.6% and one-month vol down to 9.75% by Wednesday from 10.75% Monday, according to fx options traders. Dollar/yen spot was near the JPY115 mark at the start of the week before moving higher to JPY119.75 by Wednesday.

"There needs to be a better reference for pricing--we need more issuance."--Henry Chang, head of fixed-income and derivatives at Bank SinoPac in Taipei, commenting on what is keep the firm out of immediately purchasing credit-default swaps. For complete story, click here.

TransAlta Corp., a Canadian energy company with more than USD7 billion in assets, has entered a handful of swaps on the back of a recent bond deal to convert a fixed-rate obligation into a mix of fixed and floating-rate liabilities. An official in the treasury department in Calgary said the company entered four separate swaps totaling USD125 million in which it will receive the fixed-rate coupon of 6.75% on the bond and pay four separate floating rates, which he declined to specify. He said the swaps allow the company to evenly split the USD300 million deal into fixed and floating-rate liabilities.

CDC IXIS Capital Markets North America has hired Ed Vartughian, an equity derivatives trader at SG Cowen in New York, in a similar position for its growing New York equity derivatives team. Vartughian, who started late last month, confirmed his move but referred further queries to Vuk Bulajic, head of equity derivatives at CDC in New York. He too confirmed the hire but declined further comment.

Provident Bank, a Cincinnati lender with USD15.7 billion in assets, has entered an interest-rate swap with Credit Suisse First Boston to convert a fixed-rate bond offering its parent company sold recently into a synthetic floater, said Lou Helligrath, v.p. in treasury services in Cincinnati. The bond was sold by holding company Provident Financial Group.

Deutsche Bank is planning to market its weather derivatives products globally. Ross McIntyre, director and head of weather risk, said the group has been focusing on Europe, but is now seeking business in other regions, mainly North America, Australia and Japan. McIntyre said the driving force behind the expansion has been inquiries from customers in those regions. Previously, Deutsche Bank would have made prices in response to customer inquiries, but had not been proactive in finding new customers, McIntyre said.

Fortis Bank has structured a reverse convertible note with a knock-in put referenced to Unilever. Koen Zoutenbier, senior account manager on the derivatives and structured products desk in Amsterdam, said the notes have a strike price of EUR55 and knock-in if the share price hits EUR40. Implied volatility on the put was 31%, when the trade was designed last month, compared with two-year historical vol of 25-26%.

Commerzbank Securities has created a new department, dubbed corporate risk and capital structure, to integrate the research, sales and trading of all asset classes, including derivatives, capital markets, equity brokerage and foreign exchange. The firm has named Ricardo Pascoe, head of the U.S. investment banking business in New York, and head of the global group in London. The new structure went into effect last month.

Major weather derivatives houses, including Deutsche Bank, Société Générale, Element Re and Swiss Re, met to discuss a standard weather derivatives confirmation for the first time last week. The meeting, hosted by the International Swaps and Derivatives Association, is the first of several with the aim of a standard confirmation being finalized by year-end. There were approximately 30 institutions represented at the meeting, according to Stacey Carey, policy director at ISDA in New York.

Pacific Investment Management Co. and Morgan Stanley have started looking at creating the first unfunded emerging market managed synthetic collateralized debt obligations. At the moment emerging market CDOs are referenced to bonds and the arranger issues notes, according to structurers. However, with increasing liquidity in the default swap market firms are starting to look at synthetic transactions. Credit structurers predicted default-swaps could form a major part of emerging market CDOs, as they do in investment grade products, but said liquidity and fund manager expertise has to increase first.