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Scania, a Swedish automaker with a EUR7 billion (USD6.2 billion) balance sheet, may soon purchase its first credit derivative to hedge credit risk in its leasing portfolio. The increasing homogenization of the European truck market is causing the maker of long-haul trucks to incur more concentrated credit risk, said Jan Bergman, head of the treasury in Södertälje. "We now have some U.K. and Dutch companies that are active in the whole of Europe and when they want to buy trucks, they may want to buy 500 trucks instead of two or three [as in the past], which is where you get the exposure," he said. Scania has a diversified leasing portfolio of EUR2.7 billion, although he declined to speculate how much of this would need to be hedged or give further details about the portfolio.

Demand for structured foreign exchange notes linked to dollar/yen or euro/yen has doubled in the last weeks in comparison to February as Japanese corporates, insurance companies and institutional investors lock in trades before fiscal year-end--at the end of the month. "We're seeing a lot of last minute portfolio allocations before year-end," said a trader at Lehman Brothers in Tokyo. "We're on a pace for a 150% increase from February," he noted, adding that about JPY120 billion (USD912 million) in structured notes went through the market last month.

ABN AMRO has launched what is believed to be the first capital guaranteed note in Taiwan, which could open the floodgates for a new market and has stirred up interest from rivals including Credit Suisse First Boston, HSBC, Merrill Lynch and Morgan Stanley. "This is the first guaranteed product in Taiwan," noted Anthony Wah, head of marketing for Asian equity derivatives at ABN in Hong Kong. Wah noted that with strong demand in Asia, particularly in Hong Kong, for capital guaranteed structures, it makes sense to speak with the regulators and bring similar products to Taiwan.

UBS Warburg has hired Kieran Goodwin, managing director of credit derivatives trading at Merrill Lynch in New York, as an executive director in the structured products division of its principal finance group. He is trading credit derivatives and corporate bonds on a proprietary basis and reports to Ken Karl, head of the principal finance group, according to Kris Kagel, spokesman at UBS in New York.

Rexam, the world's largest producer of beverage cans and the fifth-largest consumer packaging company, entered an interest-rate swap and a cross-currency interest-rate swap on the back of two separate bond offerings earlier this month. The company entered a vanilla interest-rate swap to convert a fixed-rate liability in euros and another to convert a fixed-rate sterling-denominated liability into a floating-rate, U.S. dollar-denominated obligation. Chris Bowmer, treasurer in London, said the U.K.-based company has nearly 90% of its operations abroad but also has a strong investor base at home, which is why the company issued in sterling and then converted to dollars. "We have stronger recognition here, investors are more familiar with the company and are more familiar with the equity story," he noted. The company has a GBP2 billion (USD2.9 billion) market capitalization.

Waddell & Reed is looking to sell some $30 million in Fannie Mae 6.5-year pass-through securities. Jim Cusser, portfolio manager of $1.1 billion, says spreads between pass-throughs and five-year Treasuries will not continue to tighten, because volatility is subsiding. Cusser has still not determined whether he will buy two- to five-year bulleted agencies or lower-grade corporates with the funds he raises. Cusser says he will look to Waddell & Reed's equity analysts and the stock market to see whether top-line corporate growth is translating into bottom-line profitability, given accounting worries at many companies. If he feels companies can translate the improving economy into stronger earnings, he will choose corporates rather than agencies. He would not specify a stock market level that would make him more optimistic about potential for corporate profits, and says only that he will monitor earnings announcements.

Usually loan traders are more than hesitant to disclose the strategies and tactics they use to close a deal. Last week, however, one starry-eyed loan trader could not boast enough about how a trip to Italy and a moonlit walk helped him win out the competition for one lucky lady. Who is this Don Juan of the syndicated loan world? He may be sitting next to you.

QCI Asset Management will swap 10% of its portfolio, or $35 million, out of corporates into Treasuries when corporate spreads tighten by 50 basis points, which should happen toward the third quarter, says Paul Roland, portfolio manager. Roland notes that corporate single-A industrials, as of last Monday, yielded 100 to 135 basis points over the curve. Roland wants to see those spreads decrease to 50 to 85 basis points over Treasuries in order to trigger the move. He declined to specify any credits that would be sold.

Edinburgh Fund Managers is reducing the duration of its $450 million fixed-income portfolio from roughly eight years to about six. Edinburgh, Scotland-based Michael Turner, head of fixed interest, says the move was prompted by the firm turning negative on the bond market, because an economic recovery, no matter how strong or weak, will push yields higher once central banks begin to raise rates. The firm uses a variety of benchmarks.

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.

UBS Warburg and Credit Suisse First Boston have landed lead roles on an upcoming bank deal for Harvest/ AMI Holdings, a newly formed company from New York-based leveraged buyout shop Harvest Partners, for the acquisition of Associated Materials. The total purchase price is $436 million, which includes $75 million of outstanding subordinated notes that will be refinanced, said a banker familiar with the transaction. The bank deal should be in the region of $165 million and bonds will accompany shortly afterwards, he added. A date for launching the bank portion is likely to be in the next few weeks. The two banks in addition to CIBC World Markets will play a role in the bonds, he said. The equity component and size of the bond offering could not be determined.