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A $45 million auction of Crown Cork & Seal went off in the 88 range this week after the company was said to have received an extension to its term loan that was set to mature on Aug. 4. An original lender was rumored to have sold the name, taking the opportunity of an up tick to reduce exposure to the company's bank debt. The name took a hit last week as news was released that the company would be unable to complete the spin-off of Constar International because of a weak equity market. Calls to company officials were not returned by press time.

Credit derivatives professionals' paychecks were flat or down on last year, according to a survey by headhunting firm Sheffield Haworth. Credit has been one of the hottest areas in derivatives for the last few years and salaries have been rising steadily, but salaries were capped to subsidize less profitable areas of firms, said one senior credit derivatives pro.

Barclays is beefing up its derivatives sales coverage for small and medium-sized corporates, through a reorganization of Barclays Business Banking's sales team. It plans to set up a similar sales structure to the one its sister company, Barclays Capital, uses to market products to the largest users of derivatives. Previously Barclays Business Banking had a handful of derivatives experts within its general advisory sales channel, but has now separated out the existing specialists and plans to hire more derivatives sales professionals. The division plans to make the new hires for the group by the beginning of September, according to Tim Kirkham, head of derivatives sales at Barclays Business Banking in London, who was hired to spearhead the effort. He added that there is no specific target number of hires and it is dependent on the talent available.

Bank of Tokyo-Mitsubishi is looking to boost its activity in the Japanese credit derivatives market. Nobukazu Saeki, manager in the derivatives and structured products division in Tokyo, said widening spreads has increased demand for structured products, such as credit-linked notes, synthetic collateralized debt obligations and hybrid notes. The government has also removed its guarantee on short-term deposit accounts in recent months, prompting investors to seek alternative investments that offer higher yield. Saeki predicted that BoTM will see two or three times more demand for credit products this year compared to last because of these factors.

HVB Capital, the Tokyo-based securities arm of Germany's HypoVereinsbank, is preparing to apply to the Japanese Financial Services Agency for a license to trade credit derivatives on its proprietary desk. "We're looking to get a license," said Manabu Nagano, director of credit derivatives trading in Tokyo. Currently, HypoVereinsbank trades Japanese and Asian credit derivatives out of Singapore, while its prop desk focuses on cash bonds, said Nagano.

Derivatives houses in Hong Kong listed equity-linked instruments for the first time last week as the new rules came into effect (DW, 7/21). The instruments are expected to become a major investment product for the domestic retail market. "We launched several ELIs on the first day," said George Ngan, head of marketing at KBC Financial Products, who have been looking at listing the product for some time, along with capital guaranteed notes (DW, 2/3). Ngan added that along with KBC, Société Générale and Credit Suisse First Boston have also issued similar instruments.

The Japanese credit derivatives market has dropped obligation acceleration and repudiation/moratorium as credit events from standard default swap documentation. "We're following the global standard," said Nobukazu Saeki, manager in the derivatives and structured products division at Bank of Tokyo-Mitsubishi in Tokyo and co-chair of the International Swaps and Derivatives Association's Japanese credit derivatives committee, referring to the fact that the U.S. and Europe do not use these events.

Pioneer Investment Management plans to launch its first structured products linked to hedge funds and may use over-the-counter derivatives to structure them. The move follows a planned merger with Momentum Asset Management.

CP Ships, one of the world's largest container shipping companies by volume, will probably enter its debut interest-rate swap as part of plans to increase its debt issuance over the next 12 months to finance upgrading its fleet, according to Iain Torrens, treasurer in London. The company, which has revenue of USD2.65 billion, raised USD200 million through a 10-year debt offering last month and may enter a swap to convert the fixed 10.375% coupon on the bond to a floating-rate liability.

A common misconception in the analysis of collateralized debt obligations is the assumption that the underlying collateral pool performs just like the market or an index. Such generalizations make historical stress analyses easy, since all one has to do is observe the historical performance of the market or index. However, CDO collateral pools tend to have far fewer securities than any broad measure of the market. As such, there is a significant risk that the collateral pool behaves differently from the market, even if aggregate risk measures, such as ratings, are similar.

Salomon Smith Barney has put its global synthetic and cash flow collateralized debt obligation businesses under one roof, according to DW sister publication BondWeek. The new group, dubbed Global Portfolio Solutions, is globally co-headed by Janice Warne, global head of structured bonds in New York, and Sumit Roy, global head of credit derivatives in New York. Both keep their former assignments in addition to co-heading the new group.