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Deutsche Bank and RBC Capital Markets have landed lead roles on an underwritten credit facility backing Petro-Canada's C$3.2 billion (USD$2 billion) acquisition of the international oil and gas operations of Veba Oil & Gas from Veba and BP. A banker familiar with the deal said the two banks are looking for co-arrangers for the C$3.5 billion loan and general syndication is slated for next month.

XL Capital Assurance, the New York-based asset-backed securities guarantor, has hired Steven Katz for a newly created position as a director in its credit group. Katz comes from Woodcliff Lake, N.J. based buy-side fixed-income manager Seix Investment Advisors. Katz will do credit research on diversified financial companies, with an emphasis on auto-finance and home-equity companies, two of the largest sectors within the ABS market. He will report to Patrick Mathis, senior managing director and chief credit officer who heads the five-person credit team. Katz says he made the move because he wanted the opportunity to expand his credit expertise within a smaller company atmosphere.

Allied Irish Bank has hired Vaughn Buck, a project finance pro from NRG Energy, to bolster its emerging project finance team in North America. AIB has been operating for a while in Europe, but the project financing capabilities are being extended to the U.S., said Paul Carey, director, corporate banking for AIB in New York. The recently established team of 12, set up about a year ago, concentrates on acquisition finance, leveraged finance, and is moving up in project finance, he said. AIB has already participated on some deals, but is indicating a long-term commitment to the market, while the sector is facing some short-term problems, he said.

The AIB move coincides with a round of cuts at Bank of America's project finance department. Charlotte-based Brian Goldstein, head of U.S. project finance, London-based Parker Knight, head of international finance, Hong Kong-based John O'Neill, responsible for Asian project finance and several bankers associated with Enron have been let go by the firm. One banker said the departure of key personnel such as Dennis Magna and Jerry Stalun to Duke Capital Partners last year marked an important point, as they were never replaced. It looks like B of A is merging project finance into the loan syndication group, said one banker, noting the high costs associated with a separate group.

Barclays Capital Asset Management is in the market buying up assets for a new $300 million collateralized loan obligation. The deal, right now referred to in the market as Venture CLO, will be backed with 90% senior secured leveraged loans and 10% high yield bonds. Hans Christensen, portfolio manager at Barclays, declined to comment on the transaction. Underwriter Credit Suisse First Boston is reportedly beginning the marketing process on the deal this week with plans to price notes for investors in roughly three weeks. Officials at the firm declined to comment.

BNP Paribas has relinquished its ambition to win U.S. high-yield lead underwriting mandates and has parted company with David Weinstein, U.S. head of high-yield origination and capital markets. Instead, the firm will concentrate on developing as a co-manager and shoring up its position in the secondary market, according to an official familiar with the plan. David Barcus, a merchant banker, will lead the U.S. origination business under newly promoted global origination head John Ong. Weinstein and Barcus declined comment. Ong did not return calls.

Banc of America Securities is shopping a $200 million, asset-based, three-year revolver for South Korean automaker Hyundai Motor, as rivals cut plants citing excess capacity. The company is the sole distributor of auto parts in the U.S. for Hyundai, which recently confirmed plans to build a new vehicle-assembly plant in the U.S. to support booming sales in North America. General Motors, Daimler Chrysler and Ford Motor have all said plants will be cut. Hyundai cars are generally inexpensive compared to their U.S. rivals. The spread on the credit is LIBOR plus 2%. Commitments are due Feb. 6 and $150 million had been raised by presstime.

Morgan Stanley reportedly bought two yards of dollar puts/Canadian dollar calls Wednesday. The move sent one-week implied vol rocketing from 6.5% to 8.5%. The trade was executed in an hour and one trader said it is the equivalent notional size as goes through in an average week.

Political risk is always the wild card when investing in China. But Amcham's chairman-elect in Beijing, Chris Murck, points out that the real risk for businesses is not the risk of social instability or insurrection: it is that arising from the legal and policy environment of a fast-changing country. "The degree of administrative discretion that still exists means that when people change, so does the implementation of the policies for which they were responsible," he says.

A project that spans 17,000 km and seven countries is bound to pose challenges. Add to this the task of convincing several banks to lend US$700 million to an undersea cable network company in an ailing telecoms sector, and you have a potential nightmare. Fiona Haddock reports on the recently completed C2C project finance deal.

The Indian government has set a target of raising US$2 billion during economic year 2001/2 through the sale of shares in a number of its companies. Prime minister Atal Behari Vajpayee has already set deadlines for disposing of shares in 13 state-run enterprises. All eyes will be on how the government handles the sale of its assets. Similar attempts in recent years have proved disastrous: in 2001, the government raised just US$88 million, and attempts to sell shares in Indian Airlines, Air India and Videsh Sanchar Nigam (VSNL) had to be withdrawn in the midst of procedural and valuation debates.

The Asian Development Bank (ADB) made a strong return to the global bond markets in January after a two-year absence. The US$2 billion five-year issue, led by HSBC, Morgan Stanley and Nomura, was completed on January 29. "When you hear the expression 'window of opportunity', I know it can sound corny," says John Keith, regional head of debt capital markets at Nomura. "But this really is what it proved to be." The ADB had been on a roadshow across the US, Asia and Japan in December to update investors on its funding plans and credit composition, and in January settled in to wait for the right moment to issue. It held off while other triple A-rated names Fannie Mae, Italy and L-Bank came to market, and in the light of confusing signals from Alan Greenspan and other members of the US Federal Reserve about future interest rate policy. Then, following more positive words from Greenspan in late January, the issuer and leads took a calculated gamble that interest rates would not be moved at the forthcoming FOMC meeting (they were proved right), and quickly launched the deal.