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Levels for HealthSouth Corp.'s bank debt plummeted roughly 30 points after reports indicated the Securities and Exchange Commission has charged the company and Richard Scrushy, its chairman and ceo, with massive accounting fraud. Traders said the bank debt is pari passu with the company's bonds, which were quoted in the mid-80s yesterday, but have since sunk to the 45-50 context after the civil case was filed. No trades could be confirmed. The charges indicate that HealthSouth overstated its earnings by $1.4 billion since 1999 in order to meet earnings expectations.

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.

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.

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.

AIG Trading Group has hired Behnouche Mostachfi, head of foreign exchange options at Commerzbank Securities in London, and Damian Zihlmann, senior market maker at Commerzbank in London, as senior fx options traders in London. Mostachfi and Zihlmann report to Donald Lee, global head of fx options and head of foreign exchange in Greenwich, Conn., said Beth Cutler, spokeswoman in Greenwich. Cutler declined comment on whether Mostachfi and Zihlmann were additions to the team or had replaced staffers who had departed. Lee, Mostachfi and Zihlmann referred questions to Cutler.

Credit market participants often follow stock prices to get some direction on credit-default swap pricing. Although there is extensive research on swap pricing, it is hard to find explicit examples of how to compute a simple relationship between the two. There are two popular approaches to modeling credit risky instruments, the structural approach and the reduced-form approach. The structural approach treats corporate liabilities as contingent claims on the issuer's assets. Assuming a simple capital structure composed of one zero-coupon bond and a layer of equity, an event of default occurs when the firm's asset value falls below the face value of the zero-coupon bond at maturity. Equity is equivalent to a call option on the assets of the firm, whose strike is equal to the face value of the debt.