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Further details have been released on the second arbitrage CDO to be launched by Euro Capital Structures (ECS), the Dublin-based securitisation boutique formed last year by Fiat and UniCredito Italiano. Lead managed by Credit Suisse First Boston and UniCredito Banca Mobiliare, the Eu603m deal will be backed by sub-participations in sub-investment grade loans.

* Citibank/Salomon Smith Barney, Credit Suisse First Boston and Lehman Brothers are believed to have won the joint mandate for Holmes V, the next mortgage backed securitisation from UK bank Abbey National from its master trust structure. The bank hopes to launch the deal this year subject to market conditions but timing and size are still to be determined.

Italian car manufacturer Fiat yesterday (Thursday) launched its third securitisation backed by auto loans, this time originated by the finance arm of its German operations Fiat Bank GmbH Germany. Lead managed by Deutsche Bank, Société Générale and UniCredit Banca Mobiliare the deal was priced 2bp tighter than Fiat's last deal that it launched in July, despite the volatile market conditions.

UK bank Abbey National this week launched its third synthetic collateralised debt obligation, the first European CDO to be launched since the terrorist attacks on September 11. Lead managed by Deutsche Bank spreads on the deal held firm despite the volatile conditions in the credit market, the triple-A piece coming 5bp inside Abbey's last CDO launched in April this year via Bear Stearns.

Federal Mogul's bank debt softened to a bid-offer spread of 50-52, coming back about a point after a high two weeks ago of 52 ½-53. However, no trades were reported. Dealers said the restructuring may be more drawn out than originally thought. "The market just stinks right now, and people are concerned that it could take longer for the company to get out of Chapter 11," a dealer said.

Deutsche Bank has hired Tim Cassidy, an interest-rate derivatives salesman at Merrill Lynch in New York, in a similar position for the firm's newly created cross-rates desk (DW, 8/26). Cassidy, who joined Deutsche Bank about two weeks ago, reports to Mal Brooks, head of cross-rate sales. "Deutsche Bank is really strong in derivatives and it's making a big push in the U.S. This new cross-rates desk gives the whole package that smarter customers are looking for," Cassidy said. Deutsche Bank launched the cross-rate desk in late August. The desk trades packages of risks made up of swaps, mortgages, agencies and government bonds. Brookes did not return calls.

Bear Stearns and CDC IXIS Capital Markets are co-agenting a synthetic collateralized debt obligation referenced to a USD1 billion pool of investment grade bonds. The structure, dubbed GIA Investment Grade CSDO 2001/2 Ltd., is relatively unusual in that the reference pool will be actively managed, according to an official familiar with the deal. To date this type of structure has been primarily used by banks looking to lay off risk, whereas the reference portfolio in this transaction will be created to take on risk, he added. Officials at Bear Stearns declined all comment, citing Securities and Exchange Commission rules preventing disclosure.

Barnaby, British Columbia-based TELUS Corp. recently entered a foreign exchange swap to convert a pair of multi-billion dollar U.S. bonds into a synthetic Canadian dollar liability. Robert Gardner, director of finance, said, "it's become a pure Canadian dollar liability. It's fully hedged." TELUS executed a six-year swap that matches the six-year USD1.3 billion 7.5% notes and a 10-year swap that matches its 2011 USD2 billion 8% notes.

Half of Bankgesellschaft Berlin's 10-strong London-based credit derivatives team has resigned over the last two months, reportedly because of uncertainty about the firm's ownership. The State of Berlin is expected to decide whether to sell its 81% stake by January, according to officials in Berlin. Frank Boenke, general manager in London, and Reinhard Fröhlich, a BGB spokesman in Berlin, did not return calls.

Credit Suisse First Boston last week reportedly bought EUR500 million (USD458 million, notional) of interest-rate floors with low strikes as a gamma bet on euro-zone rate cuts, according to London-based traders. Approximately EUR500 million of copycat trades were entered into by other firms. An interest-rate derivatives options trader at CSFB in London declined comment and press officers did not return calls. Traders said CSFB entered three and four-year floors with strikes at 2.5-3%. It is exceptional for firms to enter options with strikes as low as this and there was almost no volume in the trades before the Federal Reserve rate cut, according to a trader. The at-the-money strike on four-year euro options was 4% Thursday.

Credit Suisse First Boston has watered down its New York equity derivatives sales and structuring hiring proposals since the market downturn but still plans to hire several pros, according to a company official. He declined to specify the number of hires, but market officials said it is looking to add at least five. The officials said CSFB would also look to further build the team by shuffling employees to the equity derivatives group.

Deutsche Bank has hired Andy Pitts-Tucker, salesman at futures and options broker Cargill Investor Services, in a similar position on its weather derivatives desk in London. He starts later this month and will report to David Pearse, head of the weather derivatives business in London, who declined to comment.