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BNP Paribas and Deutsche Bank have started marketing hybrid notes in Taiwan's nascent onshore credit market and the race is on to complete the first transaction. The notes will give investors exposure to both the credit derivatives and interest rate market. C.G. Lai, head of fixed income at BNP in Taipei, said credit-linked structures are a natural extension of the growing interest-rate product market.

Hong Kong Exchanges and Clearing (HKEx) recently announced that a new type of product, Capital Protected Instruments (CPIs), is eligible for listing on The Stock Exchange of Hong Kong (SEHK). The CPIs provide a certain level of guaranteed return for investors and are regarded as structured products for the purpose of the Listing Rules of the SEHK. In order to list CPIs on the SEHK, issuers will need to comply with the listing requirements set out in Chapter 15A of the Listing Rules of the SEHK.

Singapore's United Overseas Bank is looking to join the fray of foreign houses setting up trading desks for Korea's onshore interest derivatives market. Yang Tay Ho, v.p. in Seoul, said it will likely hire one or two traders locally for the effort, but declined further comment.

Société Générale Asia recently hired Sonia Lee, Asian credit derivatives trader at Credit Lyonnais in Hong Kong, in a similar role in Hong Kong trading ex-Japan Asia credit derivatives. Lee confirmed the move but declined further comment.

"They're becoming a lot less attractive."--Nicholas Cohen-Addad, head of equity derivatives at Credit Lyonnais in Hong Kong, commenting on the effect of falling implied volatility on the Asian equity-linked note market. For complete story, click here.

The U.K.'sExport Credits Guarantee Department, a government agency responsible for facilitating and insuring British export companies, has entered its first credit-default swaps to hedge risk on loans in China and South Africa. The move follows the creation of an active portfolio management team, which was charged with putting the agency's portfolio in better shape, providing stability and developing a private market for export credit risks (DW, 2/3/02).

UBS and Credit Suisse First Boston will start making markets in the Trac-X index of credit-default swaps this week. Trac-X combines the credit derivative indices of Morgan Stanley and JPMorgan and compromises of 100 of the most liquid default swaps. BNP Paribas is also a market maker in the index. Kris Kagel, spokesman at UBS, and John Gallagher, spokesman at CSFB, confirmed the move.

Duke Realty, an Indianapolis-based Real Estate Investment Trust (REIT), has unwound two interest-rate swaps, totaling USD150 million, 30 days prior to their maturity. Gene Zink, cfo in Indianapolis, said the six-month trades were entered into at the beginning of the year as an interest rate hedge in anticipation of issuing a bond in the summer. The REIT then decided against the debt offering.

Demand for Asian equity-linked notes is expected to plummet as implied volatility hits all-time lows. Bankers said the multi-billion dollar ELN business could see volumes fall because the notes no longer offer high yields. Nicholas Cohen-Addad, head of equity derivatives at Credit Lyonnais in Hong Kong, said if volatility remains compressed at current levels for three-to-six months, the ELN markets will be severely curtailed. "They're becoming a lot less attractive," he added. Another trader said, "This could kill the ELN market."

Five-year credit-default protection on Ahold, a Dutch international retailer, tightened by around 100 basis points last Thursday to 270-290bps. The narrowing came after the corporate produced some positive headline 2000-2002 numbers for Stop & Shop, its U.S. supermarket chain, and Albert Heijn, its Dutch supermarket. Ahold is expected to produce accounts for 2002 at the end of September.

Bear Stearns has revamped its global credit derivatives operation, strengthening its London office and setting up a structured products hedge fund. The firm has lured Martin Bates, executive director at Morgan Stanley in London, to build a flow credit sales team that will complement its recent hires on the trading side. In addition, it has transferred two senior New York officials to new roles. Ralph Cioffi, senior managing director and head of structured credit product management and the insurance coverage team, is heading to Bear Stearns Asset Management to start a structured credit and finance hedge fund. Meanwhile, Martin St Pierre, senior managing director, has transferred to London as global head of structured credit derivatives.

BNP Paribas is transferring Brian Lazell, managing director and Asia-Pacific head of credit markets in Hong Kong, to London to assume the role of European head of debt capital markets for corporate borrowers. Lazell replaces Ann Iverson, who resigned in July, according to Edwina Frawley, spokeswoman in London.