Search results for

Portfolio Partners, a Melbourne-based fund manager with over AUD10 billion (USD5.65 billion) under management, is considering making its first use of credit derivatives to gain exposure to credits it cannot access via the cash market. "If we saw a tremendous opportunity in the default-swap market, we could get the documentation up and running fairly quickly," said John Hopper, senior manager of the AUD4 billion fixed-income portfolio. Portfolio Partners is currently "keeping abreast of developments in the market" and could trade default swaps within six months if investment opportunities arise.

AmeriCredit, a U.S. auto financier with a USD13 billion loan portfolio, is considering entering interest-rate swaps to convert floating-rate obligations into a fixed-rate liability next month, said Kim Pulliam, senior v.p. in Forth Worth, Texas. The company, which has USD800 million in revenue, is planning to securitize its auto loans next month to the tune of roughly USD1-1.5 billion. While the majority of that deal is likely to be issued in fixed-rate, she said the company may also issue several hundred million dollars of floating-rate debt in the deal, depending on investor demand for floating-rate paper. AmeriCredit would then seek to convert that liability into fixed-rate and pay a spread over six-month LIBOR.

Bank of America has hired Robert Webster, director and senior counsel, in a similar position. He will report to Leonie Brown, assistant general counsel in London.

Bear Stearns last week brought aboard Kin Sang Cheung, co-head of equity derivatives structuring and exotics at Lehman Brothers in Tokyo, in a new position as senior managing director and Asia head of equity derivatives trading, according to market officials. "We think he's really talented. To get a guy like him is a pretty good thing," said Lenny Feder, head of trading at Bear Stearns in Tokyo, noting that Cheung has over 15 years of experience in the business. Cheung, who was traveling to New York and could not be reached for comment, now reports to Feder. Feder continued that Cheung has joined in a new senior role and will work alongside Susan Chan, managing director of equity derivatives trading in Tokyo. Feder noted that Cheung was brought aboard to add experience to aid in boosting the firm's presence in equity derivatives in Asia.

Carlsberg Breweries has entered interest-rate swaps to convert a recent EUR500 million (USD494 million) bond offering into floating-rate debt. Lars Cordi, treasury manager in Copenhagen, Denmark, said the coupon on the bond is 5.625%. Carlsberg then entered a swap to convert the offering to floating-rate debt at a spread over six-month Euribor, said Cordi, declining to give the exact spread.

In a stochastic volatility world where the volatility is bound to stay below a certain level, Nicole El Karoui1 has shown that it is possible to delta hedge a convex position, such as a call option, with the Black Scholes model and make sure that the profit and loss from this strategy is almost surely positive. This gives a non-competitive upper replication price.

Last week's departure from Merrill Lynch of Glenn Barnes, European head of structured credit, opens the door for a reunification with his fellow credit "dream team" stars T.J. Lim, former European head of debt, and Kevin Krespi, former head of debt for the Pacific Rim, according to industry sources. The group first came to prominence as the heads of a team at UBS before moving to Dresdner Kleinwort Benson and then Merrill. Now that Barnes, like Lim and Krespi, is without a position, City watchers say the trio could reunite to form a credit "supergroup." Lim, Barnes and Krespi declined comment.

Science Applications International, a Fortune 500 research and engineering company with more than USD6 billion in revenue last year, is considering entering its first interest-rate swap on the back of a recent USD800 million bond issue. The company is reviewing swap transactions with potential counterparties, according to Ron Zollars, spokesman in San Diego.

"If they've got something creative, we're willing to listen."-- Kim Pulliam, senior v.p. at AmeriCredit in Forth Worth, Texas, commenting on the firm's financing policy. For complete story, click here.

Trinity Industries, a diversified industrial company with revenues of USD1.8 billion, may look to enter a swap to convert the proceeds from a recent floating-rate bank loan facility into a fixed-rate obligation, said Jim Ivy, cfo in Dallas. The company raised USD425 million in a syndicated loan a few weeks ago to renew a loan that was set to expire. The new loan is comprised of USD275 million in three-year debt and USD150 million in five-year debt.

Shinsei Bank is considering boosting its credit derivatives investments, eyeing Japanese synthetic collateralized debt obligations in the coming months. "We're looking for an opportunity to build our exposure to Japanese credits," said James Mudie, deputy general manager in the structured trading division in Tokyo. Mudie continued that the bank has been an active investor in global synthetic CDOs for over a year but is looking to invest in Japanese credits as it has a greater familiarity with the names. However, it has yet to invest in any domestic structures as they are not yet available in the modified restructuring language in Japan. "We're an advocate of the modified restructuring language," said Mudie, noting that it only invests in credit derivatives with the new language, as it has become the global standard.

A quartet of bankers and analysts from Bear Stearns, Putnam Investments and a research firm have joined forces to launch a telecom, media and technology long/short equity hedge fund that will use over-the-counter derivatives. The fund, dubbed Pythar Capital, is expected to start trading on Oct. 1 with USD25-40 million and will be based in the Boston area.