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Commercial mortgage backed securitisation (CMBS) has been billed as one of the main growth sectors for 2002. Commerzbank Securities expects record volumes, with the risk of Eu13.2bn of loans transferred to the capital markets since January 2001. This week the bank launched a Eu2.2bn deal for Bayerische Landesbank backed by mortgage loans from five European countries and the US.

Asset managers braved the ABS market this week as JP Morgan closed a Eu300m collateralised debt obligation for Zais Group Investment Advisors. Only the week before Goldman Sachs and CDC Ixis closed a Eu1bn synthetic managed arbitrage investment grade CDO for CDC IXIS Capital Markets. Even as the deals were launched, investors were preparing to absorb further managed CDO deals from RMF Investment Products and Meliorbanca, arranged by Goldman Sachs and Bear Stearns, respectively.

A $45 million auction of Crown Cork & Seal bank debt went off at about 88 this week after the company was said to have received an extension on a $144 million term loan set to mature on Aug. 4. An original lender was rumored to have sold the paper, taking the opportunity to reduce its exposure to the company's bank debt on the good news. One trader suggested that the buyer was looking to profit from a relative-value play. "You could sell the '02 bonds at 99 and buy the bank debt at 88," he added.

Loan traders will be legally bound to oral agreements on trades now that New York Governor George Pataki has signed the amendment to the New York State Statute of Frauds. The amendment, signed on Wednesday, eliminates the requirement of a signed agreement to bind parties to a trade. "You are legally bound to close the trade if you reach an agreement on the phone," said Jane Summers, general counsel for the Loan Syndication and Trading Association (LSTA).

Credit Suisse First Boston and Wells Fargo Bank reportedly are close to filling the $350 million "B" term loan for San Francisco-based URS Corp. Bankers said the six-year "B" piece had gained $305 million in commitments as of this week. The banks are asking for final commitments to be in before the accompanying $250 million senior note offering is priced, which is expected to happen later this month, one banker noted. Officials at the banks either declined to comment or did not return calls.

A $45 million auction of Crown Cork & Seal went off in the 88 range this week after the company was said to have received an extension to its term loan that was set to mature on Aug. 4. An original lender was rumored to have sold the name, taking the opportunity of an up tick to reduce exposure to the company's bank debt. The name took a hit last week as news was released that the company would be unable to complete the spin-off of Constar International because of a weak equity market. Calls to company officials were not returned by press time.

Credit derivatives professionals' paychecks were flat or down on last year, according to a survey by headhunting firm Sheffield Haworth. Credit has been one of the hottest areas in derivatives for the last few years and salaries have been rising steadily, but salaries were capped to subsidize less profitable areas of firms, said one senior credit derivatives pro.

Barclays is beefing up its derivatives sales coverage for small and medium-sized corporates, through a reorganization of Barclays Business Banking's sales team. It plans to set up a similar sales structure to the one its sister company, Barclays Capital, uses to market products to the largest users of derivatives. Previously Barclays Business Banking had a handful of derivatives experts within its general advisory sales channel, but has now separated out the existing specialists and plans to hire more derivatives sales professionals. The division plans to make the new hires for the group by the beginning of September, according to Tim Kirkham, head of derivatives sales at Barclays Business Banking in London, who was hired to spearhead the effort. He added that there is no specific target number of hires and it is dependent on the talent available.

Bank of Tokyo-Mitsubishi is looking to boost its activity in the Japanese credit derivatives market. Nobukazu Saeki, manager in the derivatives and structured products division in Tokyo, said widening spreads has increased demand for structured products, such as credit-linked notes, synthetic collateralized debt obligations and hybrid notes. The government has also removed its guarantee on short-term deposit accounts in recent months, prompting investors to seek alternative investments that offer higher yield. Saeki predicted that BoTM will see two or three times more demand for credit products this year compared to last because of these factors.

HVB Capital, the Tokyo-based securities arm of Germany's HypoVereinsbank, is preparing to apply to the Japanese Financial Services Agency for a license to trade credit derivatives on its proprietary desk. "We're looking to get a license," said Manabu Nagano, director of credit derivatives trading in Tokyo. Currently, HypoVereinsbank trades Japanese and Asian credit derivatives out of Singapore, while its prop desk focuses on cash bonds, said Nagano.

Derivatives houses in Hong Kong listed equity-linked instruments for the first time last week as the new rules came into effect (DW, 7/21). The instruments are expected to become a major investment product for the domestic retail market. "We launched several ELIs on the first day," said George Ngan, head of marketing at KBC Financial Products, who have been looking at listing the product for some time, along with capital guaranteed notes (DW, 2/3). Ngan added that along with KBC, Société Générale and Credit Suisse First Boston have also issued similar instruments.