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Credit-default swap spreads on Ericsson and Alcatel widened in lockstep by approximately 40 basis points last week after Moody's Investors Service placed Ericsson's Baa2 and Prime-2 long- and short-term debt ratings on review. Traders said protection on both firms widened to 370bps/390bps for five-year mid-market protection on Tuesday from approximately 330bps/350bps on Monday. On Wednesday, the levels had tightened slightly to 365bps/380bps.

Traders in Tokyo have noticed an increase in dollar/yen switch plays on credit-default swaps in the Japanese interbank market in the midst of quiet trading in recent weeks as traders look to hedge their currency risk as well as exploit mispricing on credits quoted in the two currencies.

Derivatives houses in Mumbai, including JPMorgan and Citibank, are predicting a liquid foreign exchange options market will develop within a year. Ravi Bai, chief dealer at HDFC Bank in Mumbai, said daily volumes could possibly exceed USD70 million by year-end. In contrast a trader at BNP Paribas in Singapore noted that daily trading volumes for Singapore dollar/U.S. dollar options average around USD100 million.

Mal Brooks, managing director and head of cross-rate sales at Deutsche Bank in New York, has bolted to head up UBS Warburg's new cross-rates business in Stamford, Conn., according to an official at Deutsche Bank. The firm started its cross-rates initiative in January to offer customers a package of risks made up of swaps, agencies and government bonds from a single desk (DW, 1/27). Brooks, who established Deutsche Bank's cross-rates desk in New York last year, joined last Tuesday. He reports to Michael Ice, head of North American interest-rate derivatives marketing and structuring in Stamford. Brooks and Ice did not return calls.

Cazenove Fund Management is looking to continue building its positions in medium- and long-dated single-A and triple-B bonds in its £180 million U.K. corporate bond fund. The firm has been selling triple-A rated bonds and tier-one bank paper--for example Lloyds and Barclays--to fund the new purchases, says Michel Gonnard, London-based fund manager. The firm has also been trimming its telecom exposure, when volatility permits. It had mmo2 and various issues from British Telecommunications, and now it holds BT's 5.75% of '28, which it will exit once volatility abates somewhat. "Most of the work is to build positions in long-dated triple-B issues in the primary and secondary markets whenever we can find it," says Gonnard.

Jeff Lorenzen, portfolio manager with Investors Management Group, is looking to barbell 15%, or $600 million, of the firm's portfolio, in anticipation of a flatter yield curve. Over the next two months, he will reallocate intermediate-term securities into either short-term or long-term maturities, as barbell strategies outperform best when the curve flattens, he says. The strategy has no particular trigger but is based on the view that the economy will rebound, reshaping the curve to a flatter level given the curve's historical steepness, he says. Lorenzen plans to complete the repositioning of the portfolio by the end of June, well before August, when he predicts the Federal Reserve will begin to raise rates.

The skies are not cloudy all da-heeee ....Wells Fargo, celebrating its 150-year anniversary, is exhibiting "150 Years of Entrepreneurial Spirit" at the Museum of American Financial History. The display will run through Sept. 14 and will feature events including guided tours of the Federal Reserve Bank's gold vaults and Songs from the Campfire. Visitors looking to view the gold must be at least 16 years old, have a photo ID and must arrive 15 minutes early. Aspiring campfire singers must only be at least seven and be ready to draw a photo ID.

Chandler Asset Management is looking to shift some 5-10%, or $60-120 million, of its $1.2 billion taxable fixed-income portfolio out of 18-24 month U.S. agency debentures and into two- to three-year corporates. Marty Cassell, portfolio manager, believes the economy is improving, but wants to see the major stock market indices unchanged or better over a three-month period before shifting the funds. He believes mid-May is the earliest the firm is likely to begin making the shift.

Ted Greenspan, a senior utilities trader, has left Lehman Brothers, and will join Morgan Stanley as a principal early next month, according to Tom Thees, New York head of investment-grade trading at Morgan Stanley. Greenspan fills a void on the desk created by the departure of Mike Heaney, who is moving to London to become the firm's head of European syndicate.

Owens-Illinois' carve-out term loan began trading last week with dealers trading more than $40 million in the 99 7/8 to 100 1/4 range and more traditional par players buying in. Although the paper is not funded yet because it is technically still revolver paper, traders said it was still moving on "when-issued" expectations for the term loan. The $40 million that traded is part of a $500 million revolver the company will carve-out as a term loan to make the paper more available to institutional buyers. The move was designed to redistribute exposure to the company by moving the paper out of the hands of pro rata lenders and into those of hungry institutional investors without syndicating a restructured deal. The banks holding a lot of the paper encouraged this move to make the name more liquid in the secondary market. (LMW, 4/1).

Fitch Ratings favorably views the agreement between PacifiCare Health Systems and its lenders to extend the maturity date of its senior credit facility by two years, as the company attempts to explore a more permanent and favorable capital structure. The agency has given PacifiCare an evolving outlook and if the company is successful in extending the maturity of its senior credit facility, Fitch expects PacifiCare's existing senior debt ratings will likely be upgraded one notch to BB.