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Dresdner Kleinwort Wasserstein has hired a pair of marketers from JPMorgan in Tokyo for its global debt division. Mitsuhide Shigihara, v.p. in fixed-income derivatives marketing, has joined as a director and Satoru Komaya, v.p. in credit marketing, has joined in a similar role. Shigihara said he will focus on marketing structured interest-rate and foreign exchange derivatives to Japanese firms, such as securities houses, while Komaya said he will target insurance companies and trust banks for products including private placement issuances and medium-term notes. Komaya continued that he will also start offering credit derivatives.

There are four generic forms of rated synthetic collateralized debt obligations: (1) Balance Sheet Static Synthetic CDOs, (2) Managed Static Synthetic CDOs, (3) Balance Sheet Variable Synthetic CDOs and (4) Managed Variable Synthetic CDOs. This article describes the structure of each synthetic CDO, highlights some of the features that an investor may prefer with respect to each and describes some of the documentation issues that may arise when structuring each type of CDO.

Italian loan house FinConsumo Banca plans to issue in the coming months the first 100% synthetic securitization of consumer loans. Maurizio Valfre, cfo in Turin, said the firm has a EUR1.5 billion (USD1.42 billion) loan portfolio and plans to issue two securitizations a year, with one being synthetic. Crédit Agricole Indosuez is structuring the deal, which will be based on a EUR300 million reference portfolio consisting of about 70,000 loans with average maturities of 24-27 months. Officials at CAI declined comment.

One-month implied volatility for dollar/yen options dropped last week after the Bank of Japan allayed investor uncertainty and bought approximately USD2 billion in line with its policy of maintaining a weak yen, according to foreign exchange options traders. "There seems to be a sense that the downside is protected and the [BOJ] is there," said one trader. One-month implied vol, which had been 9.2% at the start of the week, dropped to 8.7% Wednesday after the BOJ intervened through Japanese banks in the U.S. market, easing some uncertainty among fx players. On a side note, traders said it was unusual for the BoJ to buy dollars in the U.S.--it usually intervenes through European or Asian markets--and probably only did so because London was closed for a national vacation.

Imperial Tobacco Group has entered into interest-rate swaps to convert three recent bond offerings in synthetic floating rate debt. The U.K. tobacco company came to market two weeks ago with a EUR1.5 billion five-year bond, a EUR750 million three-year sale and a GBP350 million 10-year offering. In addition, it entered a currency swap in which it converted the sterling-denominated bond into a synthetic euro-denominated instrument, according to John Jones, group treasurer in Bristol.

Mitsubishi Trust and Banking Corp., with JPY20 trillion (USD161 billion) in assets, plans to start selling credit protection for the first time to generate investment returns. It is talking to a number of banks, including Merrill Lynch, Deutsche Bank and JPMorgan, and plans to pull the trigger on its first swap in the next six months, according to an official. The operation will start in London, and New York and Tokyo will follow if it is a success.

Credit Lyonnais has hired Adam Durran, head of credit derivatives trading at Barclays Capital Japan, to start actively trading credit derivatives in Japan. The bank has executed a handful of trades since it started looking at the product in the last couple of months, but market officials predicted this hire will kick start the firm's effort.

John Q. Hammons Hotels, an owner and developer of upscale hotels across the U.S., is considering entering its first interest-rate swap to convert a recent USD510 million fixed-rate bond offering into a floating-rate obligation. Paul Muellner, cfo in Springfield, Mo., said the transaction would be its first use of over-the-counter derivatives. "We've thought a lot about it and are still working on it and with LIBOR being as low as it is, it would be nice to get [the company's interest obligation] somewhere down there," he said.

Westdeutsche Landesbank has started focusing its credit derivative efforts in Tokyo on structuring large-sized credit-linked loans in Japan averaging around USD50-100 million per transaction. "We're developing an investment base," noted Hiroshi Fukuzawa, head of credit derivatives in Tokyo. He continued that the firm, which sold its first credit-linked loan structure last year, has seen growing interest and has begun pushing the structure. WestLB will look to sell 5-10 credit-linked loans by year-end. "It's my hope," said Fukuzawa.

"Our attorneys are advising me it is not as straightforward as it might seem." --Paul Muellner, cfo of John Q. Hammons Hotels in Springfield, Mo., commenting on his plans to enter the company's first interest-rate swap. For complete story, click here.

Wyndham International's bank debt levels fell dramatically after the company pulled its downsized bond deal. Traders quoted the name's increasing rate loan in the 91-94 level down from 95-98 range and the "B" term loan at the 90-93 level from a 93 trade earlier this week. No trades could be confirmed. Investors are trying to evaluate the company's next step. Calls to the company were not returned, but the company released a statement saying that it "found the market conditions not deep enough to issue the notes on terms that made sense to the company and its shareholders."