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Nationwide Building Society, the largest U.K. thrift with more than GBP75 billion (USD107 billion) in assets, is looking to hire four derivatives-savvy professionals for its treasury department as it continues to increase its assets and therefore increase its risk management activities. The company is looking to hire a head of treasury risk to manage the GBP30 billion the department oversees.

Fitch Ratings, Moody's Investors Service and Standard & Poor's are planning to allow investment vehicles set up by banks and fund managers, known as structured investment vehicles or SIVs, to sell credit-default swaps for the first time. SIVs can only invest in instruments approved by the rating agencies. The rating agencies are taking this initiative now because liquidity in credit-default swaps is improving and because capital adequacy, settlement and documentation issues relevant to SIVs have been ironed out, according to Serj Walia, associate director in structured finance at S&P in London. The development is significant because some USD80 billion is invested in SIVs.

Scholastic Corp., a children's book publishing company in New York, has entered an interest-rate swap on the back of a USD300 million bond offering it issued last month. Vinnie Marizano, company treasurer, said the swap was used to convert the 5.75% coupon on the bond into a floating-rate liability. He added that the swap was included as part of the offering and executed simultaneously.

RBC Capital Markets is merging its cash and synthetic investment grade credit business in response to convergence between the two markets, according to Walter Gontarek, head of global credit products in London. "The merger of these businesses is in response to investor demand for one-stop credit products shopping and the need to manage cash and synthetic credit liabilities under one management structure," Gontarek added. RBC's global credit products unit will now handle synthetic investment grade credit risk in loan trading, corporate bonds, credit derivatives and synthetic collateralized debt obligations.

UBS Warburg is working on a proprietary credit derivatives model which will allow end users to create baskets of default swaps to achieve tailored levels of risk over the Internet. Alberto Thomas, director in European structured products in London, said the innovation will allow potential investors to play around with specific credits to determine the expected default rate of the basket based on Moody's Investors Service's methodology. The initiative is customer-driven and comes as there is growing demand for rated default swap baskets, said Thomas.

Northern Rock has entered an interest-rate swap to convert a GBP250 million (USD354 million) fixed-rate bond into a synthetic floating-rate obligation, according to an official in the treasury department in Newcastle, U.K. The building society issued in a fixed-rate as part of its regular funding to generate cash to fit its fixed-rate mortgage portfolios and fixed-rate savings products, he said. However, it is converting the proceeds to floating because it uses three-month LIBOR as a benchmark for risk management.

UFJ Bank, created by the merger last year of Japanese Bank's Sanwa Bank and Tokai Bank, is planning to structure its first yen-denominated synthetic collateralized debt obligations and expects to issue up to USD1.5 billion this year. "I expect this will happen within six months," said Hiroyuki Yoshizawa, credit derivatives trader at UFJ. Synthetic CDOs are more attractive investment vehicles for some investors than credit-default swaps because the former can be structured to avoid mark-to-market accounting, he explained.

John Rusnak, the currency trader under investigation for losing USD750 million in foreign exchange trades at Allfirst, Allied Irish Bank's U.S. subsidiary, wanted to buy a new risk management system for the firm more than a year ago, but was turned down because of budget contraints. David Aaron, director of sales and marketing at DerivaTech, a risk management software vendor in New York, said Rusnak approached DerivaTech more than a year ago because he wanted to replace Allfirst's risk management software.

People phoning a bank helpline were greeted not by the staid tones of a financial adviser but by disco music and a claim that they had found "the best place for men to meet men." The snafu happened when The Halifax, one of Britain's largest lenders, said it had inadvertently issued the number of a gay chatline when it sent out 15,000 letters to members of its share-dealing service. According to Reuters, The Halifax has since written to customers to apologize and to let them know of the right number --for their share-dealings

Stone Ridge Investment Partners is looking to swap out of AOL Time Warner 6.125% notes of '06 (Baa1/BBB+) and into Tyco International as investors in the latter credit have become nervous over Enron-related accounting issues. David Killian, portfolio manager of $175 million in taxable fixed-income, believes the Tyco worries are overdone. Once the firm provides more clarity on its proposed reorganization, Stone Ridge will look to add 1-2% of its portfolio, or $1.75-3.5 million, in Tyco bonds, and possibly WorldCom. The AOL bonds have not widened materially over the last two months, while the Tyco 6.375% notes of '06 have widened some 165 basis points in the last two weeks. Last Tuesday, they were bid at 90.5.

Glasgow, Scotland-based Britannic Asset Management will buy corporate credits when values arise in the market. The firm, which invests primarily in sterling-denominated bonds, has been adding corporates opportunistically to its $8 billion fixed-income portfolio. It recently added Tyco International's euro-denominated '04 and '08 on the back of recent widening and WorldCom's '08 sterling issue when it hit the low 90s earlier in the month. "The bid/offer spreads were pretty poor--as they say: you could drive a horse and carriage through them," says David Roberts, head of credit, of the WorldCom bonds.