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Barclays Capital Singapore is setting up a credit derivatives operation in the Lion City and will start trading from the new desk next month. The firm has traded Asian credit derivatives out of its Tokyo office but is bringing aboard Bill Xie, credit derivatives trader at BNP Paribas in Hong Kong, to spearhead the effort. Xie will hire more traders when he starts, according to an official. Xie could not be reached for comment.

TransAlta, a Canadian energy company with more than USD7 billion in assets, is looking closely at buying credit-default protection on other energy companies. The company, Canada's largest non-regulated electricity generator, previously entered one default swap, about a year ago. It is now considering becoming a more active end user because the number of potential trading counterparties is dwindling, according to an official at the company in Calgary. "Credit and finding available energy counterparties to deal with is an issue right now," he said. "There are fewer and fewer counterparties to deal with. We haven't been in the market recently, but we may be in the future," he added.

Clinton Group, a New York based hedge fund with USD8.4 billion in assets under management, has set up a London office and is applying to the Financial Services Authority for permission to start trading. Market officials said the London office is in the preliminary stages, but is expected to be up and running in three to six months. Officials at Clinton declined comment.

Credit professionals are considering making credit-default swap trades take immediate effect on the day of sale, rather than after the current three day hiatus, and standardizing end dates. Talks have taken place over the past two weeks, but no formal initiatives have been proposed to the International Swaps and Derivatives Association, according to traders in London.

Derivative professionals in Korea have set up the Korean Swap Dealers Association to address domestic issues related to the growing derivatives market. K.K. Yoo, deputy general manager of Kookmin Bank in Seoul, said "The basic objective is to promote the development of the derivatives market and create standardized local market practices." Yoo is also serving as co-chairman alongside S.W. Hwang, head of derivatives marketing at Citibank in Seoul. Hwang was on vacation and could not be reached.

Credit Suisse First Boston has amalgamated its equity derivatives and fixed-income groups in Japan and installed Paul Kuo and Luc Pajot as co-heads. "This is part of a global integration," said Isamu Kajino, spokesman at the firm, noting that while the initiative began out of New York last year, it is now taking effect in Japan. Kajino declined to comment on the operation outside of Japan or the timeframe for the implementation. Previously, Kuo ran the fixed-income operation while Pajot looked after equity. With the new structure, Kuo is responsible for research, sales, and capital markets while Pajot will focus on trading. The duo will jointly oversee structuring activities. Kuo did not return calls and Pajot was on vacation.

Deutsche Bank is prepping its first products referenced to the iBoxx index, with two to three in the pipeline. iBoxx is a European fixed-income index jointly compiled by seven market makers to provide more transparent pricing of investment-grade corporate bonds. Jae Oh, managing director within integrated credit trading, said the intention of the new products is to give investors exposure to the widest representation of the corporate bond market. Oh and Michele Foresti, director within over-the-counter derivatives, are focusing their time on developing new products using OTC derivatives based on iBoxx.

Fleming Companies, the U.S.' largest distributor of packaged foods, is planning to enter an interest-rate swap to convert a fixed-rate obligation into a floating-rate liability. The company issued an eight-year USD200 million bond last month and is now seeking to enter a swap to convert USD50 million of it to floating-rate, said Matt Hildreth, senior v.p. of finance in Lewisville, Texas. He said that would achieve the company's optimal interest-rate mix of roughly 60-65% in fixed-rate. "That's our sweet spot," he said.

Credit-default protection on utility Duke Capital, a subsidiary of Duke Energy, more than doubled last week amid revelations about the company's engagement in roundtrip energy trades. Five-year default swaps ballooned to 290-300 basis points by late Wednesday in New York, up from 110-120bps a week before, according to traders. The company acknowledged last week that only 22 of its energy trades could be characterized as roundtrip trades, but that didn't stop investors from hitting the panic button on the energy company. Duke is also one of a handful of utilities being sued by the state of California for manipulating energy prices. "None of this stuff is new, but the headlines have been a little worse this week and the market is choosing to focus on them and people are panicking trying to hedge this thing," said one credit derivatives trader in New York.

Appleton Capital Management plans to launch a fixed-income arbitrage and an equity market-neutral hedge fund. Both funds will use the full remit of listed and over-the-counter derivatives, according to Jeremy O'Friel, head of marketing in Dublin.

HSBC has hired David Choi, head of interest-rate derivatives trading at Citibank in Seoul, in a similar role at the bank, according to market officials. "They're continuing to build up," said one official, adding that HSBC has been looking to build up its presence in Korea on the back of a burgeoning interest-rate derivatives market. Choi will report to Ian Banks, treasurer at HSBC in Seoul. Banks declined all comment and Choi, who starts today, could not be reached for comment.

The cost of dollar/euro options fell slightly last week as the greenback strengthened against the single currency, according to foreign exchange options professionals. One-month implied volatility fell to 12.25% by late Wednesday in New York, down from 13% earlier in the week. The inverse relationship between vol and the euro/dollar spot held true, as the dollar gained back some ground with spot at USD1.05 by Wednesday. It had been has high as USD1.15 earlier in the week, after the euro hit parity the previous Sunday. "I wouldn't use the word 'comfortable,' but the market is used to this situation now and we will need to see a breakout above USD1.2 to get vols much higher," said an fx options trader in New York. A common trade was for investors to purchase euro calls/dollar puts, ranging from one-month to one-year, with strikes above USD1.03. Despite the move lower in spot, 25-delta risk reversals still continue to edge in favor of euro calls, at 1.25 vol up from 1.1 vol.