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The aim of this Learning Curve is to explain the behaviour of a particularly interesting kind of barrier option, the Parisian, and to focus on its use in structuring exotic equity derivatives products.

Dealers in Singapore have started to quote 15-year Singapore dollar interest-rate and foreign exchange swaps for the first time ahead of this week's inaugural 15-year bond issue, a SGD2.2 billion (USD1.25 billion) deal by the Lion City. Swaps have traditionally gone out only as far as 12 years.

Swiss Re New Markets is considering reestablishing its over-the-counter equity derivatives desk in New York over the next several months, according to company officials. The capital markets arm of the reinsurance giant had an equity derivatives desk manned by one trader until about a year and half ago, but market officials believe it closed down due to slow business flow. "They just had no presence in the equities market," one player said. Nancy Jewell, firm spokeswoman in New York, said the desk was never formerly disbanded and has been handling business since 1996. She added, however, that the firm has recently decided to take on a more active role in equity derivatives.

TD Securities is working with sister firm TD Waterhouse to launch an equity derivatives sales effort in San Diego that will focus on high-net-worth clients. Robert Baizer, managing director in charge of the West Coast effort, said the desk, which will launch Sept. 4, will also draw on parts of TD Securities' 30-member derivatives team in New York. The sales force for the new desk will mainly be based in San Diego, and pricing will be done in New York. There will be a small sales support staff in Manhattan.

Bangkok-based Bangchak Petroleum is looking to enter interest-rate swaps to hedge exposure on new debt. Wanapa Imachai, treasurer, said it will look to pay fixed and receive floating to cover floating-rate bonds and loans. She declined comment on the size of the swap and the rates it will aim to pay and receive. But, she explained it plans to convert part of a THB5 billion (USD111 million) floating-rate bond and approximately USD30 million of its USD500 million liabilities portfolio--largely loans--to hedge against possible rate rises.

The spread between Australian credit derivatives and bonds has widened because of banks structuring synthetic collateralized debt obligations and that's creating opportunities to arbitrage credit default swaps. "Traders have been actively taking advantage of opportunities available in Western Mining and Australia Gas Light Company (AGL)," said Jim Fingleton, associate director of fixed income atSG Australia. As CDO structurers look to diversify out of U.S. and telecom debt, demand for Aussie exposure has increased which has meant synthetic CDO structurers have been selling protection. The end result is that the market has become skewed toward sellers.

Westdeutsche Landesbank plans to expand the coverage of its structured asset products group from Germany to other European markets. The department currently markets structured products, such as constant maturity swaps, credit derivatives and Bermudan options, just to German clients, according to Thorsten Goettel, head of the group in London. The bank plans to hire two more marketers to add to the existing six-member team before year-end.

Westdeutsche Landesbank has hired Hiroshi Fukuzawa, head of credit fixed income at Bank of America in Tokyo, as a managing director and head of credit derivatives. Fukuzawa was a v.p. in credit derivatives and asset securitization in Tokyo when he left West LB a year ago. He runs credit trading, structuring, and sales and reports to John Paul Garber, global head of asset securitization principal finance and credit derivatives at West LB in London. Garber was travelling and could not be reached. Fukuzawa said he will look to add a junior trader by year-end to the three-strong team and will likely hire additional staff next year, declining to elaborate. At Bank of America, he reported to Jim Kelligrew, head of global high-grade fixed income in Charlotte, N.C.

Meeder Financial will raise its cash position from zero to 50% of assets under management by selling $400 million in bonds--$360 million in Treasuries and $40 million in agencies. The move will cut the duration on the portfolio in half, to 2.25 years. Joe Zarr, portfolio manager, says he anticipates an impending economic turnaround with the end of the easing cycle, and aggressively shortening duration is representative of a belief that rates will back up from current levels. The large cash position is designed to have assets ready for reinvestment at an undetermined future date.

Reinhart, Mahoney & Bryden, a Mequon, Wis.-based firm with $700 million in taxable fixed-income under management, is seeking to shift up to 5%, or $35 million, to its corporate allocation. Jeff Bryden, portfolio manager, says he is waiting to be sure the economy has bottomed, and will read the text of last week's Federal Reserve press release closely, but did not specify a definitive time-frame for making the move. He declined to name specific credits or sectors he is interested in. He wants intermediate maturities to raise the duration on his intermediate portfolios closer to the fund's bogey, though he says much will depend upon the shape of the yield curve when he invests.