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BondWeek is the leading news publication for fixed-income professionals, covering new deals, structures, asset-backed securities, industry and market activity.

"It's an idea I have."--Hee Dong Kim, head of the financial engineering department at Korea Exchange Bank in Seoul, talking about his plans for investing in synthetic collateralized debt obligations. For complete story , click here.

UBS is preparing to trade Mexican peso-denominated derivatives, including interest rate and credit products by the end of the month as part of its expansion into emerging markets. "It's taken some time but we're all set now," said Joonkee Hong, global head of emerging market derivatives in New York.

Oil and gas producer Devon Energy has entered an interest-rate swap to convert a fixed-rate USD500 million note issue into a synthetic floater. Brian Engel, spokesman in Oklahoma City, explained that the corporate is able to reduce its interest rate costs by 1.15% via the swap. This, in turn, creates savings of USD5.75 million for the company.

ABN AMRO is purchasing embedded digital options on forward dollar swap spreads to structure a 10-year callable medium-term note. The note offers a 6.3% annualized coupon every day that the 30-year swap rate is above the two-year rate, which is a pick up of up to 130 basis points on 10-year Treasury bonds. Thomas Zieglmeyier, Swiss head of derivatives sales for financial markets in Zurich, said, "This note offers our clients the ability to take a view on the relative rather than absolute values of the 30-year and two-year dollar swap rates as well as offering a higher yield." The two-year rate normally trades below the 30-year rate, however, the market is expecting rates to rise soon and as a result the yield curve is steep. Once the Federal Reserve raises rates the curve is likely to flatten, but if the market then starts to price in fresh rate cuts the curve could invert.

Bank of China International, the investment banking arm of mainland giant Bank of China, is planning to bulk up its fixed income and equity operation in Hong Kong. Warren Kwan, head of equity derivatives, said he is preparing to hire around a total of five staff including marketers and traders. He is planning to wait until year end, however. "We're waiting until bonus season ends," said Kwan. "We want to hire multi-talented people that can look at such asset classes as fixed income, fx, equity and credit," he noted.

Barclays Capital has hired Jonathan Shiff, director and marketer in fixed income derivatives for U.S.-based corporates at UBS, as a director in corporate derivatives marketing in New York. Shiff reports to Ed Somekh, head of corporate risk management and derivatives, according to Linda Wynns, spokeswoman in New York. Neither Shiff nor Somekh returned calls.

Credit-default swaps spreads on HeidelbergCement narrowed last week as investors were re-assured by the completion of the company's re-financing initiative. Spreads tightened last to 375/355 basis points from 410/390bps. Trading was subdued and from a mixture of hedge funds, proprietary desks and asset managers.

Taiwan's China Airlines recently entered a five-year TWD1 billion (USD29 million) interest rate swap on its floating rate liability portfolio and plans to convert more into fixed rate debt in the coming months. "It's a good time to increase our liability portfolio hedging," said Yang Yen, researcher in the financial department in Taipei.

Collateralized debt obligation houses, including Bank of America and Deutsche Bank, are starting to offer single-tranche deals referenced to asset-backed securities. "We are starting to do this; it's a logical next step," said Mitchell Braselton, managing director and European head of global structured products marketing for BofA in London.

The huge role of U.S. banks in the derivatives industry means counterparties must understand the treatment of close-out netting and set-off for an insolvent bank by the Federal Deposit Insurance Corporation (FDIC). Close-out netting and set-off, both of which are typically provided under the ISDA Master Agreement, provide the most effective and efficient way to minimize credit risk with respect to the insolvency of a counterparty.

Eric Langille, former co-head of credit derivatives trading at Bear Stearns in New York, has joined Commerzbank as head of flow credit trading, which includes credit derivatives. George O'Dowd, head of New York credit trading, who Langille reports into, said the hire caps off the German firm's U.S. additions. Commerzbank is now "at full strength," he noted. Langille, who declined comment, also reports to Michael Staveley, global head of credit trading in London. Staveley declined comment.