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United Auto Group (UAG), an auto dealer in Detroit with 123 franchises in the U.S. and 55 internationally, is considering entering an interest-rate swap on the back of a recent USD300 million bond offering or unwinding several existing interest-rate swaps to get the desired fixed to floating-rate debt ratio, said James Davidson, executive v.p. of finance.

Derivatives houses, including JPMorgan, Deutsche Bank and Goldman Sachs, have agreed to eliminate the acceleration and repudiation/moratorium triggers in European credit-default swap contracts for investment-grade corporates from today, aligning the European and U.S. markets. Demand from U.S. investors for collateralized debt obligations has driven the rating agencies to recommend a more standard contract, said lawyers and traders in London. "Part of the endeavor is to assist in creating a homogenous market so [investors] can purchase credit derivatives in either market," said Habib Motani, partner and head of derivatives at Clifford Chance.

Bank of America has added a layer of management in an effort to revitalize its troubled Japanese credit derivatives business. "There was a false start," said William Fall, global head of structured products in London and the regional head of the global markets group, referring to the establishment of a credit derivatives operation in Tokyo last year. The operation failed to take off because BofA did not have the right people for the job, he added. Fall flew into Tokyo two weeks ago for an extrodinary meeting with local managers. A derivatives professional who recently left BofA, said Fall is an exceptional market leader and will make a success of the business. In the reorganization, Kenichi Tatsuzawa, head of global markets for Japan, now reports to Fall. Previously he reported to Duncan Goldie-Morrison, head of the global markets group and responsible for the bank in Asia. Tatsuzawa was traveling and did not respond to voicemail messages on his cell phone.

Deutsche Bank is working on a new way of creating capital guaranteed products, which it plans to launch this summer and market to investors as an over-the-counter swap. At the moment most capital guaranteed products are structured using either an option and a zero-coupon bond or with constant proportion portfolio insurance (CPPI). The new method, dubbed timing invariant portfolio protection (TIPP), is an evolution of CPPI, according to Xuan Karen Fang, v.p. in structured equity products in London.

Demand for dollar/yen double-no-touch options increased last week as the currency pairing remained rangebound. Typical barriers on the trade were set at JPY130-135 with maturities of two weeks to one month, with sizes between USD5-10 million, according to one trader who saw at least 10 buyers. "The Bank of Japan drew a line in the sand," he said, regarding the goal of Japanese officials to keep the yen from appreciating. Spot was JPY129.06 Wednesday.

Credit Lyonnais is establishing a multi billion-dollar fund that will invest in the high-yield, investment-grade and credit-derivatives markets in the U.S. and Europe. The French bank, which does not currently have a significant presence in those products in the U.S., has hired three investment-grade traders from Deutsche Bank and a senior credit derivatives salesman from Merrill Lynch to manage the fund, according to fixed-income officials with knowledge of the group's plans. The fund, which will launch in May, will start with at least USD5 billion to build a global investment platform across all credit products, and will include trading desks in New York and London. The group will report to Omar Abukhadra, global head of credit markets and credit derivatives, who could not be reached. Once the group is in place, it is expected it will make additional senior hires, including analysts.

Dresdner Kleinwort Wasserstein is working on what will be the first hybrid securitization that provides investors with exposure to hedge funds and private equity returns. Investors would gain exposure to hedge funds for the first four or five years of the deal with the money being transferred to private equity afterward through bonds backed by the assets. Mehraj Mattoo, managing director and global head of the alternative investment group in London, said the problem with private equity investments is they take several years to start producing high returns as the capital is held on deposit until it is drawn down. This structure gets around that problem by investing the money in hedge funds until it is needed.

Fred Dubignon, global co-head of fx sales at Dresdner Kleinwort Wasserstein in London, has resigned and left the industry. One official said, "he has made his USD10 million and wants to spend more time with his family."

A host of major firms, including Goldman Sachs and Morgan Stanley, are reportedly sitting on substantial unrealized losses in their equity derivatives books as a result of dwindling implied volatility. Equity desks have been entering collars with customers since last year in which the banks are long calls and short puts, according to traders. Firms that did not hedge their positions are sitting on mark-to-market losses as a result of time decay. Players that have hedged their positions by selling futures are holding an increasingly asymmetrical hedge as the value of their option position diminishes. One head of equity derivatives said risk managers will start to force traders to close out the positions and realize the losses in the next three months if the situation persists. Officials at Goldman and Morgan Stanley did not return calls.

Dresdner Kleinwort Wasserstein's alternative investments group plans to hire two senior-level bankers within the next few months as it expands its product offerings. Mehraj Mattoo, managing director and global head of the alternative investments group in London, said he would look for professionals with experience of structuring derivatives on hedge funds.

Coronation International has launched a new fixed-income hedge fund and will be adding a convertible arbitrage fund and a closed-end fund in the next four to six weeks. Stuart Davies, who heads arbitrage hedge fund business development in London, said the firm is in the process of converting its main business from that of proprietary trading to a family of hedge funds, using capital from the proprietary trading operation, allowing the firm to attract outside capital as well.

Azam Mistry, director and head of risk management advisory for treasury and capital markets at HSBC in Hong Kong, has resigned. Market officials noted that Mistry is a well-known figure in the region for his role as a director for the International Swaps and Derivatives Association. Mistry declined comment.