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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.

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

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

Accounting issues are set to take center stage as the European and U.S. regulators introduce new rules and set their sights on merging the systems. "Accounting has become one of the most important aspects of the credit derivatives market," according to Alessandro Cocco, v.p. and assistant general counsel in the legal department at JPMorgan in New York.

Bear Stearns last Thursday hired Raymond Wong, managing director in global equity markets at Merrill Lynch in Tokyo, in a new senior role as head of fixed income trading in Tokyo. "The chance to hire someone like Ray doesn't come around very often--we couldn't pass this up," said Lenny Feder, head of trading in Tokyo, to whom Wong now reports. Feder said the strategic hire comes on the back of the firm's build up in Japan which gained momentum last year (DW, 3/31/02). "I'm very excited with this new role," said Wong. Prior to joining Merrill, he had worked in fixed income derivatives trading at Bankers Trust and Deutsche Bank in Hong Kong and Tokyo. Wong declined further comment.

BNP Paribas has hired Pierre Katerdjian, global credit swap trader at Deutsche Bank in Sydney and former credit derivatives committee chairman for the Australian Financial Markets Association, in a new role in Sydney as a senior marketer in the structured credit products group. "This is an additional role focusing on structured credit products," said Marcus Blake, head of derivatives and structured credit marketing in Sydney.

CDO managers are considering setting time limits for triggering credit protection in order to increase transparency and appease investor concerns. The move is sparked by confusion over why some protection buyers recently have started to trigger contracts referenced to U.S. chemical company Solutia even though the restructuring credit event occurred last year.

Babcock & Brown, a boutique investment bank specializing in asset aquisition and corporate financing strategies, plans to stage its debut in the structured credit arena by launching a static synthetic collateralized debt obligation with a twist. Richard Griffin, head of capital markets product development in San Francisco, said the product will be referenced to a global pool of 50-100 default swaps, but will contain embedded event protection against risks as diverse as corporate frauds, terrorist acts and natural catastrophies.

Citigroup has added Robert Toorman, cash and credit derivatives sales to the Netherlands at Deutsche Bank in London, for its European credit sales team. Toorman reports to John Colligan, head of European credit sales. Annemarie Quill, spokeswoman for Citigroup, confirmed the move. Toorman did not returns calls and Colligan referred calls to Quill.

Replacing managers of underperforming CDOs is not always effective, as managers taking over deals often find themselves bound to pre-existing asset allocations, according to Kingman Penniman, president of KDP Investment Advisors. In many deals the securities must be deemed as a credit risk for them to be sold, which translates as requiring that they have already been downgraded. This makes it difficult to come in as a new manager and trade out of bad assets.

Deutsche Bank is in the process of marketing a structured product that gives German investors exposure to a fund of hedge funds. Johan Groothaert, global head of structured products sales and origination in London, said the product is novel because the firm is using FERI Trust, an independent German fund rater, to select the managed accounts. Jean-Marie Barreau, head of structured derivatives on managed assets in London, added that FERI will select funds with diverse strategies including long/short equity, market neutral, risk arbitrage and convertible arbitrage. The product is being sold primarily to family offices and high-net-worth individuals, Groothaert noted.

Citigroup Global Markets has brought to market a collateralized debt obligation giving equity holders prime voting rights for the potential substitution of the CDO manager, a move designed to avoid the threat of consolidating the CDO's assets and liabilities on its balance sheet. Speaking at the 6th Annual CDOs and Credit Derivatives Conference in New York last Wednesday, Amanda Angelini, v.p. at Citigroup, said the structure was created after conversations with the firm's accounting counsel as a means of sidestepping the threat of CDO consolidation under a recent Financial Accounting Standards Board rule.