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Lyondell Chemical announced on Tuesday that it would use $200 million of the proceeds from an offering of $275 million, 10-year senior secured notes and a public offering of 7,000,000 shares of common stock to pay down existing indebtedness under the company's term loans. Traders said the name was not changing hands, but quoted the term loan "E" at 101 3/4 to 102 1/2 up from the 100 1/2 101 level two weeks ago. The term loan "E" has a call protection of 102. Doug Pike, company spokesman, could not be reached for comment.

International houses in Seoul, including BNP Paribas, JPMorgan and Standard Chartered Bank, have piled into the evolving exotic bond market in Korea, structuring range accrual notes for the first time, according to market officials. The notes, such as callable bonds, reduce funding costs for corporates and offer structures appealing to yield-hungry investors (DW, 4/28). Market officials noted that Korean investors have become interested in the structured products in recent months due to prevailing low interest rates.

The International Swaps and Derivatives Association is preparing to launch in the coming weeks a daily Hong Kong dollar interest-rate swap fix that would act as the benchmark for all derivatives transactions longer than one year. The move is expected to boost volumes and aid the development of more sophisticated interest-rate instruments, such as constant-maturity swaps and cash-settled swaptions. Angela Papesch, head of ISDA's Asia-Pacific office in Singapore, said, it is looking to go live around June 25. The association will conduct a daily poll of 16 firms to determine the floating rate they offer counterparties rated single A and above on swaps with maturities of one through five, seven, and 10 years, she explained.

WestLB is prepping its first two synthetic arbitrage CDOs, which it plans to begin marketing late this month or early next. The first of the two will be managed and the second will be static, according to Janet Tavakoli, executive director in credit derivatives in London. The deals are being driven by customer demand, she said.

Different regulation for securitized equity products throughout Europe has hindered the development of the sector and ensured a prominent role for the lawyers, according to Johan Grootheart, managing director and global head of structured product sales and origination at Deutsche Bankin London.

Merrill Lynch has hired Peter Buettner, director and co-head of the correlation group at Deutsche Bank in London, as a director in exotic credit derivatives trading. Buettner, who started last week, reports to Neil Walker, head of credit derivatives trading in London, according to Walker.

Morgan Stanley is reshuffling its investment-grade and emerging market credit derivatives trading teams to meet increasing volumes and better grasp a deteriorating credit environment. Robert Breden, who had run the synthetic emerging market book from London, is in the process of moving to Tokyo where he will be co-head of Japanese and Asian credit derivatives trading with Richard Thomas. Nick Riley, who had been head of credit derivatives trading for Europe, Middle East & Africa in London, said he starts this week in Breden's old role, but will be based in New York. Breden and Thomas were out of the office and unavailable for comment.

Merrill Lynch is reorganizing its London cash and derivatives credit trading teams along industry lines and expects to mimic the reorganization in New York and Asia in the coming months. Merrill is initiating the reorganization now to take advantage of potential pricing discrepancies between various cash and derivative credit instruments, according to Dale Lattanzio, managing director and head of European high-grade and credit derivatives trading in London. The move reflects greater liquidity in credit-default swaps, meaning that demand for default swaps is now moving in lock step with demand for cash bonds.

Salomon Smith Barney is adding an offshore equity derivatives trading desk for India to its Hong Kong office and Morgan Stanley is looking at setting up a similar operation. Salomon's desk will offer market-access products, which give offshore players participation in onshore products via over-the-counter transactions, targeting such instruments as forwards, equity options and swaps as well as proprietary and customer strategies for India, according to Justin Kennedy, managing director of Asia Pacific equity derivatives in Hong Kong.

National Australia Bank in London has hired Peter Rothwell, credit trader at Deutsche Bank Australia in Sydney, and has transferred Hulya Yilmaz, manager in securitization, from NAB's Sydney office.Yilmaz and Rothwell were unavailable for comment.

The cost of one-month U.S. dollar/euro options rose last week as the dollar sank to USD0.945 Wednesday, its lowest level against the common currency in 17 months. Implied volatility rose to 9.9% late Wednesday from 9.5% at the start of the week, according to options traders in New York. A weaker dollar tends to lead to higher volatility. They said continued declines in the U.S. equity markets are causing weakness in the dollar. "There's a lack of capital inflow as a result and given the fact that the dollar is a deficit currency, you need money coming in for the dollar's value to remain high," noted one trader. He and others reported strong buying interest in one- and three-month euro calls/dollar puts with strikes ranging from USD0.95 to parity. The euro's run pushed 25-delta risk reversals further in favor of euro calls at 0.9 vol, up from 0.8 vol at the beginning of the week.