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UBS Warburg and Deutsche Bank will launch a $165 million high-yield bond deal and syndicate a $30 million revolver to back the buyout of Dave & Buster's by senior management and Investcorp. The acquisition price is $255 million, including the assumption of Dave & Buster's debt, explained an Investcorp spokesman, who declined comment on the structure of the debt financing. A banker familiar with the deal said the company is more interested in long-term money than with using bank debt to fund the deal. Pricing has not yet been decided. "It is likely UBS and Deutsche Bank will look to bring in a couple of Investcorp relationship banks on the revolver," said the banker

Carl Icahn is in the market for XO Communications bank debt, making a direct appeal in a letter to investors in the credit and pushing levels up 6-7 points. Market players said Icahn has sent a letter to XO bank debt holders rather than work through Wall Street trading desks in search of a bank position. Approximately $25 million was believed to have changed hands as high as 52, although the amount that Icahn bought could not be determined. The debt had been trading in the 46-47 range. Icahn's office declined to provide a copy of the letter sent to investors.

ABN AMRO plans to merge its global cash and credit derivatives trading groups. The group will be headed by Niall Cameron, managing director and global head of credit trading and debt syndication in London. Cameron said he will finalize the rest of his team over the coming weeks.

AEP Energy Services, the European wholesale energy marketing and trading subsidiary of American Electric Power, has received internal approval to start trading weather derivatives in Europe and plans to pull the trigger on its first trades in the coming months. Thor Lien, managing director in Oslo, said AEP will concentrate on structured products, such as precipitation index swaps for hydroelectric power plants. He added the energy company will also structure products linked to temperature and, if there is demand, wind speed.

Alliance & Leicester, with approximately GBP2 billion (USD2.92 billion) in capital, is considering entering the credit-default swaps market for the first time. An official at the Leicester, U.K.-based mortgage bank said it will use credit-default swaps if it determines there is no significant documentation risk. In addition, the bank would be looking at writing protection for high-grade entities. "It is all about certainty," he said, explaining that the bank would like to see clearer documentation of what defines a default and tightening of the cheapest-to-deliver rules. It is unlikely to enter the market within the next six months, he added.

One-month euro/dollar implied volatility rose last week as the euro appreciated against the dollar and reached levels not seen since Sept. 17. Implied vol reached 9.5% last Wednesday from earlier in the day when it was at 8.55%. Leveraged accounts were buying euro calls with strikes at USD0.935 when spot was trading at USD0.92, traders said. The single European currency was trading between USD0.91-0.92 at the beginning of the week.

Credit Suisse First Boston has set up a specialist marketing and sales team for major credit derivatives end users and boosted its structuring and trading capabilities. The group, dubbed flow credit derivatives coverage, is headed by Rob Lynn, managing director, according to market professionals. The firm has also hired Peter Nguyen, v.p. marketing to hedge funds and convertible arbitrage accounts at Merrill Lynch, to work in the new group. The firm set up the desk to cater to the growing demand from companies, such as hedge funds, insurance companies and banks' with large loan portfolios, who are regular users.

Covered call option writing by Japanese corporates has rocketed over the past few weeks, according to market officials. One trader said his firm is receiving around 30 requests per day, compared with 10 inquiries a month or two ago. Another estimated trades had increased by around 30%. "People are starting to believe that the economy has bottomed out," said Jim Clark, head of equity trading at UBS Warburg in Tokyo.

Bear Stearns recently moved Wee Siang Lee, associate director of credit derivatives in London, to the Tokyo desk in a similar role as part of the firm's buildup in credit derivatives in Japan. He reports to Ralph Orciuoli, head of credit trading in Tokyo. Lee said he will focus on structured transactions, such as trading baskets of credit-default swaps. "We're getting a lot of inquiries," he added.

In February the French regulator enacted a decree operating an in-depth reform and update of the legal framework for French funds, known as organismes de placement collectif en valeurs mobilières (OPCVMs), to enter into derivatives transactions. This follows the European Union's Council of Finance Ministers directives on harmonised investment funds, know as undertakings for collective investment in transferable securities (UCITS). The 2002 Decree further amended the provisions of decree (no. 89-624 September, 1989).

Merican & Partners Asset Management, with first quarter assets under management totaling USD30 million, is preparing to launch its first hedge fund in the coming weeks and will use over-the-counter derivatives. The fund, dubbed the Iris Asia Fund, will target markets between Pakistan and New Zealand, said Omar Merican, ceo in Kuala Lumpur. He noted that the multi-strategy fund will incorporate strategies such as net-long volatility including convertible bond arbitrage via asset swaps, long/short plays and risk arbitrage.

IntesaBci is reviewing its structured finance and advisory department in an effort to find possible reference portfolios for balance sheet synthetic securitizations. Andrea Fabbri, deputy head of credit derivatives in Milan, said there is a 70% chance it will securitize some of these assets and it is just a question of choosing which ones.