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Salomon Smith Barney has hired James Berkeley, credit derivatives salesman at Merrill, for its distribution effort in New York. Berkeley confirmed he had made the move and is looking forward to the new opportunity. He referred further queries to his new boss Mark Miller, head of corporate sales including credit derivatives. Miller did not return calls.

Siemens Financial Services, a financing subsidiary of Siemens, is considering joining a handful of corporates that sell--as well as buy--credit protection on high-grade names as an investment tool. The company already buys protection referenced to its receivables portfolio, said Ralf Lierow, director of portfolio management for the European equipment and sales financing department of SFS in Munich. He added it has not yet sold protection because the equipment and sales department does not have a banking license and will not consider applying for one because the expected volume of business would not justify it. However, it is currently reviewing other areas of Siemens through which it could sell the protection, he said, declined further comment on this point. Once it has established how it can become a protection seller, Lierow said he will present the idea to the board for internal approval. The entire process could take several months.

Last week's Learning Curve dealt with new legislation and supervisory regulations and directives, while this week's will look at judicial decisions, tax and accounting.

The cost of U.S. dollar/euro options continued to climb higher last week as the greenback hit a 17-month low against the European currency. Implied volatility rose to 10.15% Wednesday from 9.75% at the start of the week. "It's not screaming up by any means, but [vol] is steadily going up as the dollar gets weaker," said one trader. As a result, and as continued weakness in the U.S. equity markets indicates, the trend will continue for the foreseeable future. Spot was USD0.955 Wednesday. A common trade was for investors to buy six-month and one-year euro calls struck at parity. "People are hedging themselves on the back end in case the euro goes beyond that," noted one trader. That helped push 25-delta risk reversals 25% higher from 0.8 vol to one vol. "Everyone expects there will be a manageable appreciation of the euro for the time being," he said.

UBS Warburg last week brought aboard Laurent Combalot, head of sales at Indosuez W.I. Carr Securities in Hong Kong, in a new role as executive director in the equity risk management group in Hong Kong covering Asia ex-Japan. Combalot said he will handle equity derivative sales and structuring for institutional clients in the region. "I'll be offering a wide range of products," noted Combalot. The firm will market such products as equity-linked notes, capital guaranteed products and index-swaps.

UBS Warburg has hired two marketers to sell structured credit and interest-rate derivatives products to the insurance sector, said Michael Ice, managing director and head of North American structured marketing and sales within the interest-rate/foreign exchange group in Stamford, Conn. The firm also plans to hire an associate for the group. Glenn Taitz joins from Merrill Lynch as executive director of structured products and will market interest-rate and credit products to life insurance and property and casualty companies. And Wim Ludington, also an executive director, comes via JPMorgan and will focus on selling structured credit products to reinsurance companies. The two form the insurance sales group for interest-rate and structured products. Both report to Ice, who said the hires do not reflect a new effort as "[selling to] insurance companies can't be a new initiative," but he noted they do mark an increased emphasis on the sector.

WestLB has hired four credit derivatives professionals from Commerzbank Capital Markets in New York, according to Commerzbank officials. The four--Peter Tchir, Joe Carroll, Vitali Fiks and Ed D'Allesandro--formed the core of Commerzbank's credit derivatives operation in New York. Tchir headed up the structuring effort which included Carroll and Fiks. D'Allesandro was a flow trader.

"There will not be a trading book. There will be no Enrons here."--Ralf Lierow, director of portfolio management for the European equipment and sales financing department at Siemens Financial Services in Munich, commenting on the company's plans to sell credit protection. Click here for complete story.

"WorldCom is AARRRRRGGHHHH".... It was tough getting info Friday morning, as some desks tuned into the World Cup match between the U.S. and Germany. One trader answered his phone and started to answer a question when he abruptly joined in a frustrated, anguished scream that went across his trading floor as a U.S. chance turned into a near miss.

Marty Margolis, portfolio manager with Public Financial Management, says he will rotate his firm's short and intermediate fund by 8%, or $200 million, from agencies into Treasuries. The reason for the move, he says, is because agency bonds in the less than two-year maturity range have seen their spreads over Treasuries tighten by eight to 10 basis points during the second quarter, which makes them eligible for liquidation as spreads are bound to widen, he says.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Cavanaugh Capital Management is considering shortening duration by selling U.S. agency debentures and adding mortgage-backed and corporate bonds in two- to five-year maturities. Jim Dugan, portfolio manager overseeing $400 million in taxable fixed income, says the firm will seek to reduce its agency exposure by 6-8% in its $80 million core composite portfolio. The 3.9-year duration of the core composite portfolio is slightly short its bogey, the 4.32-year Lehman Brothers aggregate index. Dugan says the firm may look to bring duration down to 3.5 years. It will begin buying once 10-year Treasury yields show signs of stability. Last Monday, they were at 4.85%--representing a drop of 16 basis points in five days. Dugan says the firm is not looking for an absolute level before investing, but it will continue to wait as long as such a rate of appreciation for Treasuries persists.