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Two Italian issuers came to market this week with securitisations of residential and commercial mortgages, pushing spreads out to levels not seen since the end of last year. Banca Agricola Mantovana, a wholly owned subsidiary of the Banca Monte dei Paschi di Siena group, came to market with a Eu306m deal via the bank's own investment banking arm, MPS Finance. The same day two banks based in northern Italy - Banca Popolare di Cremona and Centrobanca - pooled mortgages to launch a Eu323m deal via Citigroup/SSSB.

Deutsche Bank is this year set to become a major issuer of European commercial mortgage backed securities (CMBS). Deutsche spun off its conventional property banking business into Eurohypo in June 2002, but has built up a new real estate debt markets team in London to originate property loans in the manner of US investment banks.

Nine banks of the Banca Popolare di Emilia Romagna group launched a securitisation of non-performing loans (NPLs) this week via SG, using Italian government bonds to overcollateralise the bonds. SG has already used the technique, in a smaller Eu148m deal for 24 co-operative banks last December.

The loan market is watching Fleming Companies this week as rumors circulated that the company had cancelled a meeting with its banks, drawn down on its revolver and could ultimately end up filing for bankruptcy. The company's "B" loan traded in the 94-95 context today and the revolver was offered at 90 with no bids. The food distributer's 10 1/8% notes also tumbled, falling more than 15 points since last week to the 38 range. While the bank meeting was postponed, dealers said the company only drew down on a portion of its revolver, which it needed to fund its capital-intensive business. Fleming financial officials did not comment by Wednesday afternoon.

Barclays Capital has hired Michael Wheeler, an investment grade credit trader from Deutsche Bank in New York, for a similar position. At Barclays, Wheeler will report to his former boss Mark Jicka, managing director and head of credit trading, who joined from Deutsche Bank late last year, where he had headed up investment grade credit trading, said an official familiar with the situation. Jicka declined comment. Wheeler could not be reached.

Barclays Capital has hired Steve Kelleher, foreign exchange sales to institutional clients at Bank of America in London, and Jonathan Pollock, director of institutional fx sales at Credit Suisse First Boston in London. Both will report to Roddy Boulton, head of European fx sales, and will market fx products to institutions, according to individuals familiar with the situation. Boulton was on holiday and could not be reached. A spokeswoman did not return calls.

Banc of America Securities has hired Edward Mirsepahi, senior equity derivatives marketer at Commerzbank Securities in New York, as a principal in equity derivatives marketing to financial institutions. Officials familiar with BofA said the hire reflects a move by the derivatives giant to take advantage of adverse market conditions by nabbing experienced derivatives staffers from rival firms. Mirsepahi was among a round of recent Commerz layoffs (DW, 2/23), noted one insider. He will focus on marketing structured derivatives, according to Jennifer DiClerico, spokeswoman in New York.

Banc of America Securities is preparing the European debut of its synthetic collateralized loan obligation product, SERVES (Structured Enhanced Return Vehicle). SERVES is referenced to a portfolio of high-yield loans, which is then leveraged via a total-return swap, according to firm officials. The details of the European launch are still being ironed out, noted the officials, declining to elaborate. Officials familiar with BofA expect the European offering to be referenced to European high-yield names.

Brascan Corp., a Toronto-based holding firm with interests in commercial properties, financial services and power plants, has executed an interest rate swap to convert a recent USD200 million fixed-rate bond into a synthetic floating-rate liability. Brian Lawson, cfo, said the firm enters swaps in order to keep a balanced book. It does, however, keep a modest amount of floating rate exposure in order to take advantage of the shape of the curve, he explained.

The price of one-month euro/dollar options spiked to 10.4% Wednesday, 0.6% higher than two days previously and up from 9.6% where it sat the previous week. The hike came on the back of a dramatic appreciation in the euro, which saw the dollar dive to USD1.10 against the single European currency, down from USD1.08 the week before. The sudden move caught the market slightly off guard as euro/dollar was trading in a tight range during February, the trader noted.

Investment banks, including Deutsche Bank, ABN AMRO and Barclays Capital, have begun to receive requests from European corporates to restructure interest rate and foreign exchange swaps to ensure they can be treated as hedges under International Accounting Standard 39. European corporates have to start preparing for the accounting standard now as they must file IAS accounts from next year, according to bankers.