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Citibank and Goldman Sachs are preparing to market a $1.3 billion credit forSC Johnson Wax Professional that is expected to score big with institutional investors but present a challenge in its sale to banks. The credit includes a $500 million "B" term loan, set to launch next month, and an $800 million pro rata piece that some relationship lenders have had a peak at but is not yet in the market. A near-starved institutional market is expected to scarf up the "B" tranche as the supply and demand imbalance has left buysiders chasing the same credits. But bankers are reserving judgment on the pro rata, noting some relationship lenders who have seen the deal have walked away.

On news that Kmart might head into bankruptcy, levels dropped dramatically from 95 to 85 on Tuesday and then down to 70-75 today, following a third consecutive ratings downgrade from Fitch to CCC from BB- on its bank facility. There was conflicting information on trading volume. Some dealers reported that there were many trades, but others said no trades had occurred as bids have been thrown out to test the market.

Barclays Capital and Goldman Sachs are separately planning to set up onshore interest-rate derivatives desks in Korea in the coming months, according to officials at both firms.

BNP Paribas has pulled out of the weather derivatives market. "The long-term profitability of this business is not at a level that our shareholders necessarily expect," said Jonathan Mullen, head of corporate communications at BNP Paribas in London. He was unable to give details of the French bank's profitability projections. The move will not result in any redundancies, he added.

GT Group Telecom, a local telephone exchange carrier, is considering unwinding some of its foreign exchange swaps as a way to raise capital, according to a company official in Toronto. The move is an opportunistic play to capitalize on the exchange rate moving in favor of the Canadian telco. "We've been looking at this for awhile now. We're still not certain which swaps will be unwound but there is a strong likelihood that something will be pulled off within the next three months," the official added. The company's swap portfolio is relatively small and it is only looking to unwind a portion to test the waters before possibly unwinding the entire portfolio, the official said. He declined to be more specific about the exact size and exactly how much it is looking to unwind.

Six of the largest credit derivatives houses were planning to meet--as DW went to press Thursday--to bash out a one-page confirmation document. Lawyers representing Credit Suisse First Boston, Deutsche Bank, J.P. Morgan, Goldman Sachs, Merrill Lynch and Morgan Stanley were scheduled to meet Friday and one official at Deutsche Bank predicted the document should be ready within weeks.

The European Investment Bank is plans to hire a derivatives-savvy capital markets officer to work in its funding group in Luxembourg. The recruit would be partly responsible for the development bank's funding in the debt markets, particularly in the U.S. dollar markets, as well as interest-rate and foreign exchange swaps on the back of those deals.

Venk Reddy, an equity derivatives trader at Bank of America Securities in New York, who left the firm last year to start an Internet business, has returned to head BofA's newly created equity financial products group, according to Van Nguyen, managing director and global head of equity derivatives trading. Reddy was an equity derivatives trader before leaving the firm to set up ZEO, a wireless travel guide Web site. He declined further comment about the Internet venture.

Standard Chartered and BNP Paribas have separately started recommending zero-cost dollar/yen digital strategies, in light of the expected repatriation of funds to Japan as the country's year-end approaches.

Danske Hedge is preparing to offer its first fund of hedge funds and will likely structured capital guaranteed notes on the fund using over-the-counter derivatives. Andreas Tholstrup, managing partner in Copenhagen, said it will offer the products to Scandinavian and Luxembourgian investors who require the guarantee for tax reasons.

The French treasury will likely execute a further EUR200 billion (USD178.3 billion notional) in interest-rate swaps over the next three to four years in order to reduce the average duration of its debt to four years.

Asia Financial Holdings, a Hong Kong-based financial company whose subsidiaries include Asia Commercial Bank and Asia Insurance, with over HKD20 billion (USD2.5 billion) in assets, is planning to use over-the-counter foreign exchange options for the first time. The firm will primarily trade options for speculative positions as a way of increasing its revenue streams, but it will also use them as a hedging tool on its USD400 million global bond portfolio. "This will be for hedging exposure as well as for speculation," said Vinson Lei, treasury manager.