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The European Investment Bank has entered an interest-rate swap on a GBP150 million (USD216 million) bond it issued earlier this month to hedge the interest-rate risk. The swap converts the fixed-rate proceeds from the two-year bond deal to floating-rate liabilities, according to an official in the capital markets group in Luxembourg. The development bank issued another fixed-rate deal at the same time--a four-year GBP150 million bond--for which it does not plan to enter a swap.

Groupama Asset Management plans to shift 20-25% of its portfolio, or $30-37 million, from Treasuries into corporate bonds, betting that interest rates will rise over the next 12 to 18 months. Dan Portanova, portfolio manager, says the loss of the U.S. government surplus will also hurt Treasury rates. He says the firm will look to acquire bonds of industrial companies such as Tyco International, General Electric, 3M Worldwide and Ingersoll-Rand, which he says typically perform well during the early stages of a recovery. "Things are in place for us to start putting these types of trades on and it's just a matter of availability," he says. Portanova hopes to find bonds in three- to seven-year maturities, as he believes they offer the best value at present.

M&G Investments, one of the U.K.'s largest money managers, will add tier-one U.K. banks to its £1.2 billion corporate credit portfolio. Anna Lees-Jones, London-based portfolio manager, says she will pick up paper in both the primary and secondary markets. "U.K. banks have better fundamentals than [European Union] banks, because they haven't taken on as many non-performing loans and their business risk is less," she says. Lees-Jones declined to name the banks she is considering.

Dan Shackelford, portfolio manager with T. Rowe Price, says his firm is going to swap $200 million from intermediate Treasuries into credit products, on the view that interest rates will remain range bound and that the firm's priority is to add yield to the portfolio. Over the past two weeks the fund swapped $500 million ($250 million each into corporates and mortgage-backed pass throughs). Shackelford says the move will continue over the next two weeks, as the firm is going to sell an additional $200 million worth of Treasuries which it will evenly allocate to agencies and corporates. Shackelford says that the only real consideration for this move was a reach for additional yield.

Alliance Capital Management has dismissed two U.S. credit analysts: Jim Ferguson, an investment-grade analyst, and Betsy Hill, a high-yield analyst, according to a senior official at the firm. The official says Hill and Ferguson were dismissed due to "management-related issues," but declined to elaborate. The official says the dismissals "had nothing to do with individual credits they were covering," disputing a widespread market rumor that the dismissal of Ferguson, who covered Enron, was related to that company's collapse. Ferguson and Hill could not be reached, and it could not be determined whether they have found employment elsewhere. The official says it is still "up for discussion," whether the company will make new hires to replace Hill and Ferguson.

London-based Barclays Capital is planning to hire origination bankers to concentrate on the French and Italian securitization markets. Robert Palache, co-head of securitization, says he is looking for "all-arounders"--bankers who can pitch a deal to clients, investors and the ratings agencies. Palache oversees the part of Barclays' securitization business that focuses on acquisition finance, infrastructure finance, general corporate finance and acquisition financing for private equity and venture capital groups. The precise number of hires has not yet been determined, and Palache did not provide a timeframe for hiring.

Banc of America Securities has hired Mert Arinc as associate banker in its Charlotte, N.C.-based global asset-backed securitization department. Arinc says he will report to Andy Glenn, managing director in charge of auto-backed transactions within the ABS group. Arinc will focus on both auto and credit card transactions. Glenn did not return calls and it is not clear whether Arinc's position is a newly created one. Arinc comes from San Francisco-based Providian Financial, which has been in the headlines frequently recently for its high-profile financial problems. At Providian, he reported to Mike Riley, head of the securitization group. Arinc says he decided to make the move because working on a sell-side securitization team on the sell-side provides a better opportunity than working for an issuer. Arinc was at Providian for three years.

Fixed-income energy analysts on the buy- and sell-sides are concerned that continued warm weather this winter could result in an excessive supply of natural gas, driving down bond prices of issuers that are not adequately hedged in the futures market. Because a number of companies that store gas are required to withdraw excess supply at the end of the heating season, the market may see a sudden flood. "Natural gas storage levels are extremely high, and if they remain high into the spring, it could be negative for prices," says Ted Izatt of Lehman Brothers, the top-ranked investment-grade energy analyst on the 2001 Institutional Investor All-America Fixed-Income Team. Izatt says Burlington Resources and Devon Energy are two of the most vulnerable companies. Burlington Resources 6.5% notes of '11 were bid at 180 basis points over Treasuries last Tuesday, while the Devon 6 7/8% of '11 paper was bid at 225 basis points over the curve.

Nicholas Bravard, Goldman Sachs' London-based head of European high-yield trading, has left the firm. Bravard was long-rumored to be one of the London junk market's more highly compensated traders. "He's known to be the biggest guy in the market," says a head of high-yield trading at a rival sell-sider. When told that Bravard had left Goldman, the trader quipped: "Now it makes sense why we're doing so much more business lately." Bravard's next destination could not be determined and he could not be reached for comment. Rebecca Nelson, a Goldman spokeswoman, said she did not know the reason for Bravard's departure, and that his replacement has not been named. London-based European high-yield traders say their Goldman counterparts told them Bravard had retired. This was met with some skepticism: "That's ridiculous. He's only 36," says one.

Merrill Lynch has laid off Phil Gorrubbo, a director of investment-grade fixed-income sales in its Atlanta office. Gorrubbo had been at Merrill for nearly a decade, according to firm insiders, who believe he is the only investment-grade salesman laid off by Merrill in the recent round of cuts. One investment-grade salesman at another firm says that since the asset class had a record year last year, it has typically seen fewer layoffs than in other areas such as high-yield that turned in a relatively weak performance.

Morgan Stanley and Lehman Brothers are developing a host of corporate bond baskets to build on what they say is considerable investor interest in this rapidly expanding new market. Morgan Stanley plans to unveil one or two more versions of its 10-year basket, called TRACERS, in five- and/or 30-year maturities in the next two weeks, and may eventually launch sector-specific products as well, says Tom Thees, the firm's New York head of investment-grade trading. Lehman just last week launched TRAINS in five- and 10-year baskets, and will be introducing similar products over the coming months in response to requests from investors, according to Rick Rieder, co-head of global credit trading at Lehman. Rieder declined to be more specific.