Search results for

Fleming Companies, the U.S.' largest distributor of packaged foods, is planning to enter an interest-rate swap to convert a fixed-rate obligation into a floating-rate liability. The company issued an eight-year USD200 million bond last month and is now seeking to enter a swap to convert USD50 million of it to floating-rate, said Matt Hildreth, senior v.p. of finance in Lewisville, Texas. He said that would achieve the company's optimal interest-rate mix of roughly 60-65% in fixed-rate. "That's our sweet spot," he said.

Credit-default protection on utility Duke Capital, a subsidiary of Duke Energy, more than doubled last week amid revelations about the company's engagement in roundtrip energy trades. Five-year default swaps ballooned to 290-300 basis points by late Wednesday in New York, up from 110-120bps a week before, according to traders. The company acknowledged last week that only 22 of its energy trades could be characterized as roundtrip trades, but that didn't stop investors from hitting the panic button on the energy company. Duke is also one of a handful of utilities being sued by the state of California for manipulating energy prices. "None of this stuff is new, but the headlines have been a little worse this week and the market is choosing to focus on them and people are panicking trying to hedge this thing," said one credit derivatives trader in New York.

Appleton Capital Management plans to launch a fixed-income arbitrage and an equity market-neutral hedge fund. Both funds will use the full remit of listed and over-the-counter derivatives, according to Jeremy O'Friel, head of marketing in Dublin.

HSBC has hired David Choi, head of interest-rate derivatives trading at Citibank in Seoul, in a similar role at the bank, according to market officials. "They're continuing to build up," said one official, adding that HSBC has been looking to build up its presence in Korea on the back of a burgeoning interest-rate derivatives market. Choi will report to Ian Banks, treasurer at HSBC in Seoul. Banks declined all comment and Choi, who starts today, could not be reached for comment.

The cost of dollar/euro options fell slightly last week as the greenback strengthened against the single currency, according to foreign exchange options professionals. One-month implied volatility fell to 12.25% by late Wednesday in New York, down from 13% earlier in the week. The inverse relationship between vol and the euro/dollar spot held true, as the dollar gained back some ground with spot at USD1.05 by Wednesday. It had been has high as USD1.15 earlier in the week, after the euro hit parity the previous Sunday. "I wouldn't use the word 'comfortable,' but the market is used to this situation now and we will need to see a breakout above USD1.2 to get vols much higher," said an fx options trader in New York. A common trade was for investors to purchase euro calls/dollar puts, ranging from one-month to one-year, with strikes above USD1.03. Despite the move lower in spot, 25-delta risk reversals still continue to edge in favor of euro calls, at 1.25 vol up from 1.1 vol.

The International Swaps and Derivatives Association last week released to members the second draft of the 2002 ISDA credit derivatives definitions. It incorporates four new provisions, including the completely new concept of qualifying guarantees. Industry lawyers said the second draft broadens the scope of the definitions and clarifies the first draft.

The International Swaps and Derivatives Association last week released to members the second draft of the 2002 ISDA credit derivatives definitions. It incorporates four new provisions, including the completely new concept of qualifying guarantees. Industry lawyers said the second draft broadens the scope of the definitions and clarifies the first draft.

Lehman Brothers has moved Marcel Koebeli, executive director and head of derivatives marketing to Swiss clients, to London from Zurich to become head of equity derivatives sales for Northern Europe, which excludes France, Spain and Italy. Koebeli is not replacing anyone, but simply providing additional focus on marketing equity derivatives to clients in Northern Europe, because of what the firm sees as a growing market, according to a spokeswoman. Riccardo Petrachi, executive director, will assume responsibility for equity derivatives in Switzerland from Koebeli.

Credit Lyonnais recently hired Jeffrey Chu, structurer at BNP Paribas in Hong Kong, in a new role as a director for its Hong Kong desk, handling interest-rate derivatives structuring, according to Frédéric Lainé, Asian head of fixed income and derivatives in Hong Kong. "This will allow us to better serve corporate end investors," said Lainé, declining further comment. Chu, who now reports to Lainé, also declined comment.

Morgan Stanley has hired Tsang Chi Foon, structurer in the global relative value group at Deutsche Bank in Hong Kong, in a similar role in Hong Kong, according to market officials. "He's one of the best structurers out there," said one market official familiar with the move, noting that Tsang had been with Deutsche Bank for over five years and focused on foreign exchange structuring.

Hermann Watzinger, managing director and head of debt markets securitization and portfolio credit derivatives at Merrill Lynch in London, has been let go, according to an insider. This move comes just two weeks after a reorganization orchestrated by Harry Lengsfield, head of debt markets for Europe, Middle East and Africa, in which Glenn Barnes, head of European structured credit, was pushed out (DW, 7/8). Watzinger reported to Dale Lattanzio, managing director and European head of global principal investing and structured finance. Lattanzio declined to comment. Watzinger could not be reached.

"The basic objective is to promote the development of the derivatives market and create standardized local market practices."--K.K. Yoo, deputy general manger of Kookmin Bank in Seoul, explaining the motivation behind setting up the Korean Swap Dealers Association. For complete story, click here.