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Penstock Partners and Commerzbank Securities this week revealed details of a $1.34bn synthetic collateralised debt obligation launched on December 19. Spirit Finance-I Ltd is the first in a series of transactions planned by New York-based finance boutique Penstock. Two tranches of funded notes totalling $80m were offered beneath a triple-A rated $1.26bn credit default swap with XL Capital Assurance. Rated by Standard & Poor's, a triple-A piece of $60m and a double-A $20m piece were sold with legal maturities of December 2006.

* Morgan Stanley is preparing to launch Clare Island, a Eu400m collateralised debt obligation backed by loans and bonds originated by Allied Irish Banks. The books have already closed on a Eu30m triple-B piece, a Eu25m double-B piece and the equity thanks to strong investor interest. Market participants suggest that a Eu212m piece rated triple-A and Eu104m of double-A rated paper are still to be sold. Price talk on the triple-A piece is 45bp-48bp over six month Euribor and around 75bp over on the double-A paper. Around 70% of the primarily European portfolio consists of senior secured loans, 20% mezzanine loans and 10% high yield bonds. The deal is expected to be priced in early February.

Alan Lo, managing director and head of equity derivatives, Asia Pacific (ex-Japan) at Deutsche Bank in Hong Kong resigned last Monday. Reasons for the departure could not be determined. Lo declined all comment.

BNP Paribas and Lehman Brothers within the next few weeks will launch syndication of a $400 million loan backing CSG Systems International's acquisition of the billing and customer care assets of Lucent Technologies. Peter Kalan, cfo and v.p. of finance, said CSG has fully committed bank funding and the credit lines should carry spreads of between 2-3% over LIBOR. It could not be ascertained whether the banks bid for the business or if the loan is fully underwritten. Officials at both banks did not return calls.

BNP Paribas' bank deal for Navis Partners, backing the acquisition of MACTEC from CHB Capital Partners, hit the street running and could be full by the end of this week. A banker said some accounts committed to the $140 million, seven-year "B" tranche before the Jan. 18 launch and the "B" tranche is on its way to filling up. The deal also comprises a five-year, $35 million revolver. Pricing is LIBOR plus 4 1/4% on the term loan "B" and LIBOR plus 3 3/4% on the revolver.

Columbus McKinnon, is negotiating a new credit facility with FleetBoston Financial, its existing lead bank, after violating covenants on its existing $225 million facility. "We were planning to refinance anyway," said Robert Montgomery, executive v.p. and cfo of Columbus, an Amherst, N.Y.-based manufacturer of handling, lifting and positioning products. "The current agreement expires in March 2003 and we wanted a new one in advance of that." Officials at Fleet declined to comment.

A $25 million piece of Crown, Cork & Seal reportedly traded through Goldman's desk mid-week in the 86 context as Kmart continued to plummet into the 53 range. Traders said the market perceives the Kmart bank debt to have more upside than the bonds which are hovering around 47 even though the bank debt is pari passu to the bonds.

Deutsche Bank has set pricing and a bank meeting date for the $70 million add-on credit for Merisant, the tabletop sweetener company, whose consumer products include Equal and Canderel. The "B" term loan will have an out-of-the-box spread of LIBOR plus 3 1/4% and the fees will be revealed at the bank meeting next Tuesday. The financing is aimed at paying down subordinated debt incurred in the leveraged buyout of Merisant by Pegasus Capital Advisors in March 2000. The business was purchased from Monsanto, which had decided to concentrate on its pharmaceutical and agricultural products businesses.

Citibank and Merrill Lynch are racing to become the first to offer over-the-counter derivatives on Indian stocks and expect to hit the market in the next six to 12 months. "We want to be the first to bring this out," said an official at Merrill in Mumbai.

An exchange-traded credit derivatives market could emerge from the rubble of Enron's failure as over-the-counter professionals start kicking around the concept of credit products that bypass counterparty credit risk. Paul Mullin, global head of sales at broker CreditTrade in London, expects one of the big exchanges will list some form of credit derivative by year-end. While it would be a liquidity boon to the credit market, a listing would also benefit the exchanges. "They need product and credit is the one that is missing," he noted.

Aquila Energy has hired Valter Stoiani, weather derivatives marketer and structurer at Enron in Houston, in a similar position in Kansas City, Mo. Stoiani, who will do both marketing and structuring, is scheduled to join at the end of January, according to a company official. The official declined to comment on whether this is an expansion to the department.

Convertible bond players in Japan were left with millions of dollars of paper losses after Chugai Pharmaceutical called back a JPY30 billion (USD227 million) 12-year convertible bond issue last month. The Tokyo-based pharmaceutical company exercised early redemption on its 2006 convertible bonds at JPY104 near the end of December after a merger agreement with the Swiss healthcare giant F. Hoffman-La Roche. The bonds were trading at a premium of JPY125 before the early call, which resulted in paper losses of up to JPY19 per bond for firms that held the underlying.