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Credit derivatives dealers, including JPMorgan, BNP Paribas and Société Générale, are bidding for a portfolio of synthetic CDOs that Gen Re Securities has put on the block. The portfolio is believed to include a significant portion of deals that Gen Re purchased from Enron Credit following the energy company's collapse, according to a market official. Tim Frost, head of European credit derivatives at JPMorgan, declined comment. Le Liepvre Hubert, head of credit structuring at SocGen in Paris, declined to confirm or deny the move and Kate Webster, a spokeswoman at BNP in London, declined comment. Officials at Gen Re did not return repeated calls.

Chase Trust Bank has bought JPY11 billion (USD82.3 million) (notional) of interest-rate caps as a hedge in a securitization it structured for Japanese consumer finance company AEL Corp. It bought the caps from ING Barings, according to Udo van der Linden, v.p. of the Asian securitization group at ING in Tokyo.

Deutsche Bank has restructured its flow and structured equity derivatives departments as a global unit. The department is now headed by the European head, Yassine Bouhara, managing director and head of structured and flow equity derivatives, according to Rick Goldsmith, co-head of global equity derivatives.

Dresdner Kleinwort Wasserstein is looking to hire at least one structurer for its structured credit group in New York within the next month. The new hire would focus on structuring synthetic collateralized debt obligations, according to an official at the firm. The planned hire is prompted by the increase in deal volume in the U.S. "We recognize this is an area we need to build. Synthetic CDOs are the wave of the future," the official said.

The European Investment Fund, a subsidiary of the European Investment Bank, has set up a risk management team which could make the fund's first use of over-the-counter derivatives to hedge the performance of its EUR2 billion (USD1.75 billion) venture capital portfolio. That would mark the first time an institution has used derivatives to hedge the performance of its private equity portfolio, according to equity derivatives professionals. The OTC derivatives would form part of a broader risk assessment and management initiative the EIF is undertaking and would not occur until after the risk management office has quantified its risks, which is expected to take until year-end.

One-month U.S. dollar/Japanese yen implied volatility skyrocketed more than 200 basis points Thursday as the yen surged to its highest level since late last year and had its biggest one-day gain against the dollar in more than seven months. Implied vol rose from 8.8% Wednesday to nearly 11% Thursday; spot was JPY128.6 Thursday, compared to JPY130.6 the day before. "It's two vols more, it's beautiful," gushed one options trader at a European bank in London. Spot had been rangebound for the previous month.

Finland may use over-the-counter derivatives to alter the maturity profile of its EUR60 billion (USD52 billion) portfolio of outstanding debt for the first time. Petri Piippo, senior manager in the debt management office at the State Treasury in Helsinki, said the government is conducting a modeling project to determine the optimal lowest-cost way to manage the portfolio, including through the swaps market.

The buyside arm of Bank of Montreal, BMO Nesbitt Burns, with USD7 billion in assets under management, is considering investing in its first synthetic collateralized debt obligation, according toIan Clare, v.p. and portfolio manager in Toronto. Clare declined further comment. However, an official at the firm said it has been planning a possible foray into the burgeoning North American synthetic market for several months. He added that a decision about how much BMO will invest in the synthetic venture has yet to be determined.

Credit-default swap trading on Australian airline Qantas Airways soared last week as interbank players reacted to news that the proposed financial rescue of domestic rival Ansett Australia fell through, resulting in the company suspending all flights from midnight last Monday. "Qantas has in effect become a monopoly here, with an 87% market share," noted a credit derivatives trader in Sydney. Last week around 10-12 trades went through the market, in lots of USD5-10 million, whereas in a typical week, Qantas trades two or three times. "It's without a doubt the best positioned airline in the world," said Glenn Hodgeman, head of Australian dollar credit trading at Salomon Smith Barney Australia in Sydney. The spread tightened in from 95-105 basis points before the news to 85-95bps last Wednesday.

SNCF, the French rail operator, has entered a cross-currency interest-rate swap on the back of the GBP350 million (USD498 million) bond it sold earlier this month, according to Christine Hemat, treasurer in Paris. SNCF converted the entire proceeds of the deal in the swap, which also matches the 25-year tenor of the bond offering. Hemat said the company issued in sterling because it affords longer maturities than the euro market, which is not deep enough and does not extend beyond 15 years.

Merrill Lynch plans to bulk up its foreign exchange desk in Tokyo on the back of its global effort to become a more significant force in foreign exchange products, according to market officials. As part of the plan it is setting up a short-term interest-rate trading group and hiredEddie Takata, v.p. of interest rates at Dresdner Kleinwort Wasserstein, as a director on the desk, according to Takata. He is due to start in April. Takata declined to elaborate.

Five-year credit protection on Weyerhaeuser tightened 20 basis points after the company's USD5.5 billion bond issue was oversubscribed Wednesday. It was the largest corporate bond offering this year and resulted in spreads moving in from 130bps on Wednesday morning to about 110bps by the market close. Spreads on the Tacoma, Wash.-based company were at 125bps a week prior to the bond offering.