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Packaging products company Crown, Cork, & Seal extended the maturity of its existing $2.5 billion facility and secured an additional $400 million term loan in the wake of decreased credit ratings related to the company's asbestos exposure. Timothy Donahue, senior v.p. of finance, said he believed that overall the deal was a success despite some delays by participants related to the company's well-publicized asbestos exposure. "Some formerly supportive banks became unsupportive and then supportive again," said Donahue who declined to name banks or provide specifics related to syndication.

A $5 million piece of Charter Communications' bank debt traded in the Street at 99 3/8 on the heels of talks of a $300 million add-on from J.P. Morgan Chase. Charter has a deal to acquire AT&T Broadband networks. Early in the year, Charter traded into the 99 5/8 range, as dealers noted the company's insulation from economic swings (LMW, 1/28). A dealer said the term "B" add-on will not change pricing, which pushed levels a bit lower. "In a market already loaded with paper from Charter and Nextel Communications, they're just going to throw in more paper, not add anything special. Normally, they increase the pricing to make add-on more liquid," he said. The add-on is rated BB+, priced at LIBOR plus 21/2 %, and J.P. Morgan Chase is the sole book runner.

With Ireland putting the final touches to legislation for its Pfandbrief style product, the European covered bonds market is clearly thriving. But as France, Germany, Luxembourg, and Spain jostle for position, investors, regulators and the rating agencies are scrutinising the relative merits of each market more closely than ever. In this special EuroWeek supplement, Philip Moore reports on how the issuers are responding to the attention.

A $1.3 billion asset sale pushed up levels for JC Penny Funding Corp. to the mid-90s. A $5 million piece of Emmis Communications' bank debt traded at 100 as the company announced a $200 million bond deal. Charter Communications traded at 99.375.

A market for options exists because options have a unique, calculable price. For this price to exist, the market must have a mechanism for ignoring the different risk tolerances of the different players in the market. Risk neutral probabilities is a tool for doing this and hence is fundamental to option pricing. While most option texts describe the calculation of risk neutral probabilities, they tend to gloss over their importance. Failing to incorporate risk neutral probabilities can lead to incorrect conclusions.

Brad Poprik, associate in global credit derivatives trading at Merrill Lynch in New York, has joined Deutsche Bank as v.p., high-yield and investment grade credit derivatives trading. Poprik brings headcount on the high-yield and investment grade credit derivatives trading group to five. Poprik's position is new, as Deutsche Bank is expanding the group in response to increased market demand, said Alex Brockman, managing director, global credit derivatives. "We see all of credit derivatives as a growing area, and we chose to strengthen our coverage of the high yield and investment grade markets," he added.

Salomon Smith Barney is pitching an equity derivatives trade designed to isolate the energy assets from telecom and energy conglomerate Williams and capitalize on their relative cheapness.

Credit default swap spreads on five-year protection narrowed in the telecom sector last week after France Telecom came to market Wednesday with a USD16 billion bond. The five-year spread on France Telecom came in 10 basis points to 170bps and the same contract for British Telecommunications and Deutsche Telekom both moved in 15bps to trade at 155bps on Wednesday.

The Merton Miller Group, (MMG) which is composed of four founding fathers of the derivatives markets, met recently in Reston, Va., to continue their dialogue on the dramatic forces that are changing the futures industry. Senator Richard Lugar (R-Indiana), chairman of the Senate Agriculture Committee, participated in the event, filling a chair left vacant by the late Nobel Laureate Merton Miller, which is now reserved for guest participants in his honor.

Schroder Salomon Smith Barney is recommending clients enter interest-rate swaps in which the customer wins if Polish interest-rates fall and Czech interest rates rise. Poland's central bank is expected to cut interest rates further next month as the threat of inflation has diminished, while the spread between short-dated Czech and euro interest-rate swaps likely will widen as interest rates in euro-land and the Czech Republic diverge.

Several banks in Taiwan are looking to beef up their derivatives teams in interest rate, currency and equity products to meet increasing client demand for hedging these risks.

Ekachart Finance, a Thai finance company with THB24 billion (USD553.4 million) in assets, hopes to become a market maker in the Thai derivatives market once it receives a restricted bank license from the Bank of Thailand. The finance company plans to merge with four other financial institutions, after which it hopes to receive the license and engage in many of the same activities as commercial banks, including derivatives, said Pattana Setthachayanon, v.p., treasurer in Bangkok. The new entity will likely be called National Bank.