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JPMorgan is thought to be the first derivatives house to start marketing a collateralized fund obligation to investors in Asia. The CFO, dubbed Man Glenwood Alternative Strategies I, referenced to USD500 million of hedge fund investments, is being marketed globally but several tranches will be sold to Asian clients in the next two to three months, according to an official at JPMorgan. The manager of the portfolio is Man Investment Products.

Yamato Life Insurance, with JPY300 billion (USD2.3 billion) in assets, is considering making its first purchase of a synthetic collateralized debt obligation in the coming months. "We're studying the possibility," said Yoshimitsu Takano, manager of fixed-income in Tokyo, who runs the insurer's JPY20 billion fixed-income portfolio. He continued that Yamato Life may invest in yen-denominated tranches as they offer higher yield over traditional fixed-income instruments but he said it was too early to estimate the potential size or structure of its investment. He added any CDO it invested in would have to be referenced primarily to Asian credits.

Rabobank is looking to structure its first USD500 million synthetic collateralized debt obligations in Asia by year-end, according to Michael Hyde, executive director of capital markets in Singapore. "We've done deals outside of Asia and we're looking to leverage our success by replicating those strategies," said Hyde. He added, the firm has started to receive interest in Asia amid a growing understanding of credit products.

Shinsei Bank is looking to boost its nascent derivatives operation and expand into equity products by recruiting an equity derivatives trader to lead the buildup. "We're looking for a key hire," said Marten Touw, head of the markets division in Tokyo, adding that after a senior equity derivatives trader is brought aboard, there is the potential to build a team under him. Touw joined Shinsei last year from Standard Chartered Bank where he was the head of global markets for North East Asia (DW, 2/18/01).

Murphy Oil, an oil and gas exploration and production company with an approximate USD4 billion market cap, is considering converting some of its fixed-rate debt to floating. Kevin Fitzgerald, treasurer in El Dorado, Ark., said the company paid down approximately USD200 million of its floating-rate bank debt with a recent fixed-rate USD350 million bond offering, causing its percentage of fixed-rate debt to increase. Murphy Oil's total proportion of fixed-rate debt stands in the mid-70% range, up from the high 60% range prior to the bond deal, Fitzgerald noted, adding that the company is in the process of deciding on its ideal mix of fixed- and floating-rate debt for its USD800 million portfolio.

Credit-default swaps spreads on Deutsche Telekom, France Telecom and KPN came in last week because fixed-income investors feared Deutsche Telekom would cancel its pending bond offering. The investors put their cash to work instead by purchasing telco outstanding debt, said traders in London. As rumors that Deutsche Telekom would cancel its EUR5-8 billion (USD4.5-7.2 million) pending offering spread through the market, five-year protection tightened to 200 basis points/215bps from 230bps/240bps on Tuesday into early Wednesday. France Telecom tightened to 350bps/370bps from 380bps/400bps, while spreads on KPN tightened to 240bps/260bps from 268bps/285bps in that same time frame. Traders said volume was in the USD100-200 million range, and was weak in general last week because of the U.K. and European holidays.

Steve Kohlhagen, a former University of California, Berkeley professor who built the fixed income derivatives business at Wachovia Securities, is ending his decade-long stint as head of all fixed income sales and trading for derivatives and cash at the Charlotte, N.C.-based firm. Kohlhagen, 54, said he will be leaving Wachovia in August to pursue a career writing mystery novels with his wife, Gale. "I spent 10 years at Berkeley and 10 on Wall Street: it's time to move on," he said. However, he has agreed to stay on board through the last half of 2002 to continue overseeing risk management for the fourth largest financial holding company in the U.S. and help it to find a successor for his position. "We've already started searching for a successor to head the division in Charlotte," Kohlhagen said.

The Tokio Marine and Fire Insurance Co. is planning to structure in the coming weeks what is believed to be the first typhoon derivatives contract. "It's the first of its kind in the world," said Toshihiko Aizawa, head of the product development group in Tokyo. He added, "Typhoons are a constant concern for people and companies in Japan--we expect a lot of demand for this product."

Baring Asset Management, which manages a total of $16.24 billion in global fixed- income and $500 million in its global high-yield portfolio, is looking to add new paper from European high-yield issuers. "We've been quite active in new issuance on the high-yield side. We have become involved where we feel comfortable," says Toby Nangle, fund manager for fixed-income and currency. Most recently, Baring has bought into deals from Sanitec and JohnsonDiversey. "The markets are so small it's hard to get any volume on trades, but if good deals are coming through the pipeline, we will add issues opportunistically," says Nangle. He declined to say which specific trades he was considering.

Mike Materasso, portfolio manager with Fiduciary Trust Co. International, says he will rotate 5% of one of the firm's $3 billion funds, or $150 million, from Treasuries and agencies into sovereign bonds over the next three weeks. He reasons that sovereigns have more room for appreciation than in the U.S. as prospect for future growth in Canada, Australia or Germany remains lower. The firm will stay underweight on the five-year part of the U.S. curve, because of the Treasury's announcement that it may issue five-year Treasuries on a monthly basis, a move that would inflate supply and depreciate prices.

www.blowout.com ... One buysider speculating on the likely performance of an upcoming credit said it should blow out, on the reasoning that everything else is blowing out. "If you or I were to launch a deal it would probably fly," he joked. "It's like the dot.com era of the loan world."

Merrill Lynch Investment Managers (MLIM) has been selling telecom paper, while adding cyclical names with stable cash flow on the view that investor sentiment is improving, but confidence is still shaky regarding the macroeconomic picture, corporate profits, and the ability of companies to execute their business plans. John Burger, manager of the firm's $1.45 billion corporate total return portfolio, says MLIM recently sold $10 million in telecom names such as the Vodafone 7.75% notes of '10 when they were at 128 basis points over Treasuries because the telecom sector does not have stable cash flow. It added $20 million in cyclical sectors, such as autos, lodging and leisure. Those include the Starwood Resorts 7.375% notes of '07, and the Cendant Corporation 6.875% notes of '06. The Starwood bonds were 292 basis points over the curve at the time of the purchase, while the Cendant paper was at 325 over Treasuries.