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Singapore's DBS Bank, one of the largest lenders in Asia, is planning to offer synthetic collateralized debt obligations in the first quarter. "This is where the market is going," said Sandeep Gill, head of credit derivatives, who will spearhead the effort. Gill said it is waiting for internal approval to launch the structured products, which will happen in the coming months. It established a credit derivatives desk earlier this year (DW, 8/28).

Steve Patterson, v.p. and credit derivatives trader at Dresdner Kleinwort Wasserstein in Tokyo, is relocating to the firm's New York office next month. "It's home," said Patterson, adding that he has been at Dresdner in Tokyo for three years. After his departure Asian credit trading will be handled out of London until a replacement is found. He declined to elaborate on the reasons for the move. Patterson reports to Matteo Mazzocchi, global head of credit derivatives and securitization in London. Mazzocchi did not return calls.

Deutsche Bank has begun selling what it believes to be the first credit derivatives products in the onshore Malaysian market. The firm has structured two or three over-the-counter credit-linked notes in recent weeks for local clients. A market official in Kuala Lumpur said that as local investors have started to use fixed-income instruments, primarily bonds, and are now becoming open to the idea of alternative products, adding "they are beginning to open up their eyes". The notes are structured on Malaysian triple A rated names.

Deutsche Bank plans to start offering capital guaranteed products on baskets of hedge funds. Johan Groothaert, head of equity derivatives structured products in London, said it has decided to offer these products in response to demand from insurance companies and high-net-worth individuals for principal-protected exposure to hedge funds. It will offer principal protected notes on single hedge funds, baskets of hedge funds managed by Deutsche Asset Management and third party baskets of funds.

Five-year credit default protection on Hilton Hotels Corp. widened 300 basis points last week to about 500bps, as the market braced for a massive slowdown in the gaming and lodging sector prompted by a growing worldwide fear of traveling for both business and leisure. Prior to the Sept. 11 attack on the World Trade Center, credit default protection on Hilton Hotels was around 180-200bps. U.S.-based traders said volumes were more than three times the average for this time of year. The typical size of the trades was USD5-10 million. Similarly five-year credit default protection on Park Place Entertainment, formed two years ago when Hilton Hotels split its gaming and lodging divisions into two separate companies, widened to 330bps from 130bps. "People are just not flying on business trips or vacations. A real fear of flying has gripped the globe and its having a major impact on the gaming and lodging industry," said one U.S. credit-default swaps trader.

Gen Re Securities plans to complete its first synthetic collateralized debt obligation in Asia this month. The firm's first CDO for Asian investors will be referenced to a basket of U.S. and European names, according to Naoki Inoue, managing director and branch manager in Tokyo. He added it plans to structure a synthetic CDO referenced to Asian names within three months.

Icelandair plans to put on euro/dollar collars rather than purchase forwards to hedge its net short dollar position because, even though it believes the greenback is likely to weaken, it is required to hedge a minimum of 50% of its currency exposure. Sveinbjorn Indridason, director of treasury in Reykjavik, said the dollar might weaken because the airline sector and the U.S. stock markets are expected to sell off following terrorist attacks in Washington, D.C. and New York.

Cayman Islands-based fund manager Absolute Plus.com plans to launch several hedge funds, which will use derivatives. Manfred Kastner, managing director in Vienna, said it will launch a euro-denominated absolute return fund next month, a long/short European equities fund in the first half of next year and is also considering a convertible arbitrage fund in the second half of next year. He expects all the funds to raise EUR50 million (USD46.5 million) within the first 12 months and EUR100 million after two years.

Despite the high exposure of businesses to rainfall risk most weather derivatives that have been traded have been based on a temperature indices. Nevertheless many end users, such as farmers or hydroelectric generators, are sensitive to rainfall magnitude and frequency. The consequences of too much or not enough rain are spread widely and, directly or indirectly, we all suffer from abnormal rainfall magnitudes.

Salomon Smith Barney has reorganized its equity derivatives sales team after two heads left the bank. Ken Farrar, global head of equity derivatives sales to institutional clients in New York, and a second banker who headed U.S. institutional equity sales, left the firm Sept. 6. Joe Elmlinger, global head of structured equity products in New York, has taken the expanded role of global head of derivatives marketing. He will report to Andy Constan, global head of equity derivatives in New York.

Société Générale plans to set up a synthetic collateralized debt obligation program with reinsurance companies and asset managers. The firm is looking for one or two asset managers and reinsurance companies and expects to structure three or four managed synthetic CDOs a year, according to Wissem Bourbia, head of CDOs in Paris. He added that to his knowledge the French bank is among the first to set up such a scheme. Each deal would be a minimum of EUR500 million (USD464 million).

Société Générale plans to start trading interest-rate derivatives in Korea next month. J.Y. Jung, treasurer in Seoul, said the firm will look to become a major player in the domestic swap market. He added that it will commence trading once it has completed installing systems. Last month SG hired J.H. Cho, head of trading at Samsung Life, as its chief dealer of fixed income products.