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Réseau Ferré de France, which owns the infrastructure of the French railroad, has entered a cross-currency interest rate swap on a recent 32-year GBP50 million (USD83 million) bond. In the swap, the government agency receives the 5.2% coupon on the bond and pays fixed-rate euros. The official said the maturity of the swap matches that of the bond.

Indigo Partners, a New York-based hedge fund start-up run by a former Goldman Sachs official, is preparing to launch an Asian-focused convertible arbitrage fund early next year. Indigo Capital will focus on Korean, Japanese and Taiwanese convertible bonds, according to Richard Han, managing partner and formerly assistant v.p. on the equity derivatives and convertibles desk at Goldman in New York. The firm also plans to trade in Hong Kong in the near term and possibly in China, he added.

InterContinental Hotels has entered a floating-rate swap to convert part of a recent EUR600 million (USD702 million) 10-year bond. Anthony Stern, head of treasury in London, said it is the firm's policy to hedge around half of the liabilities. He added it would consider hedging more of the bond if swap spreads and absolute rates rise.

Govett Investments, a major issuer of capital guaranteed products structured with options, plans to launch its first investment instrument that uses a dynamic trading method to provide the protection. Conrad Preece, associate director in London, said one of the reasons Govett is considering switching from using zero-coupon bonds and an option to Constant Portfolio Proportion Insurance (CPPI) because low interest rates have made option strategies less attractive.

HSBC Securities has purchased EUR1 billion (USD1.16 billion notional) in reverse knock-out euro calls/dollar puts. Traders said this is double the usual size of such trades. This size of option is only executed a couple of times a year, noted traders. Kathleen Rizzo Young, spokeswoman at HSBC, could not comment by press time.

ING Financial Markets has hired Achara Sapcharoen, credit derivatives trader at Bear Stearns in Tokyo, in a similar role on its fixed income desk in Singapore. Sapcharoen, who starts early next month, will report to Mark Newman, head of financial markets and Asian head of the structured products group in Hong Kong. Newman declined comment and Sapcharoen could not be reached. Market officials noted that she is likely a replacement for Trevor Vail, credit derivatives trader, who moved to Royal Bank of Scotland in Tokyo earlier this year (DW, 4/27).

HSBC, often considered to punch below its considerable weight in the financial markets, is preparing a major push into foreign exchange that it expects will see its structured fx business double to USD50 billion (notional) in the next 12 months. Mike Powell, treasurer and head of global markets-Europe, said it will roll out structured products that have worked in Asia and broaden its global product range.

Korea First Bank, with KRW37.1 trillion (USD32.2 billion) in assets, is planning to enter an interest rate swap on the back of a recent 10-year USD200 million bond. John Shin, assistant manager in the trading and sales department in Seoul, said the bank plans to convert the fixed rate issue into a synthetic floater, likely within three months.

JPMorgan sent an e-mail to its credit-default swap index clients last week which laid out the firm's opposition to a rival default swap index. "Competing indices are bad for clients, as they cannibalize liquidity," the e-mail stated. The e-mail was in response to an agreement by 11 dealers to launch an index of 125 investment-grade North American credit-default swaps, dubbed iBoxx N.A. I.G. A JPMorgan official confirmed the e-mail.

Liquidity in seven to 10-year credit-default swaps has picked up recently, with one dealer seeing long-dated protection being traded on a daily basis compared with only a few times a month earlier this year. Alex Reyfman, U.S. credit derivatives strategist at Goldman Sachs in New York, said interest in long-dated swaps is largely driven by real money-accounts wanting to match duration risk in their portfolios. Longer maturity default swap contracts offer credit spread hedgers greater sensitivity for the same level of instantaneous default risk relative to five-year contracts, he added.

Merrill Lynch is bringing aboard Li Dong Sun, assistant v.p. in the treasury department at Citigroup in Beijing, as a marketer in the strategic solutions group in Hong Kong. Li, who starts in the coming weeks, reports to Samir Atassi, director and head of the strategic solutions group in Hong Kong. Atassi confirmed the hire but declined further comment. Li could not be reached for comment.

Merrill Lynch is making another push into the Japanese equity derivatives market and has transferred responsibility for the desk back to Tokyo. Yasuhiro Fujiwara, former head of equity capital markets in Tokyo, has assumed control of the desk. Merrill scaled back its commitment to the Japanese equity derivatives market at the beginning of the year and moved management of the operation to Hong Kong because of the dismal outlook for the Japanese market. Fujiwara declined comment.