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Market sources said the last step in making a manager switch final on Indosuez Capital Funding IV from Credit Agricole Indosuez to Royal Bank of Canada will require approval from the ratings agency. "Rating agenices have stopped changes before but on this deal there's no reason it shouldn't go through," said one source close to the deal, referencing the fact that the management team at RBC was the former management team on the old deal. The management team at RBC, led by Dan Smith, formerly of Indoseuz, will be meeting with rating agency personnel from Fitch Inc., Standard & Poor's, and Moody's Investors Service at the end of the week. Officials at the rating agencies declined to comment. Smith did not return calls by press time.

Prudential Investments Japan, with a fixed-income portfolio of JPY100 billion (USD806 million), plans to launch a fixed-income fund in Japan that will purchase credit-linked notes and synthetic and cash collateralized debt obligations if there is enough demand. "We'll be conducting a feasibility study," said Mayuka Tomizuka, in the investment management department in Tokyo, noting that the decision will come down to the level of demand among its Japanese institutional clients. If the demand is deemed to be there the fund could launch in the latter part of next year. The fund manager has not established a target size or return for the fund, according to Tomizuka.

ABN AMRO Asset Management is looking into purchasing and selling credit derivatives next year to tailor its exposure to specific credits for its EUR850 million (USD749 million) European corporate bond fund. An official in Amsterdam said the fund, which holds about 150 investment-grade credits, has been in discussions with Merrill Lynch to determine whether it makes sense to use single-name default swaps. ABN uses a Merrill index for the fund, which is why it is talking to the dealer and not its in-house bank. However, it would be open to talking to other potential counterparties as well, according to the official. The asset management company would use default swaps to gain or reduce exposure to specific credits at specific maturities, which is currently difficult in what he called the relatively sparse European cash bond market.

Enron's contribution to the credit derivatives market--bankruptcy swaps--likely will die off if the power company files for bankruptcy, according to London-based credit derivatives traders. "Bankruptcy swaps was something it set up and something it wanted to make big, but it never really took off," noted a trader in London. "Bankruptcy swaps was something they set up and look where they are now," he added. Enron's European operations were placed into administration Thursday and Alex Parsons, spokesman in London, declined comment.

Rohan Douglas, head of credit derivatives research at Citigroup in New York, resigned from the firm last week, according to a company official. Douglas reported to Sumit Roy, global head of credit derivatives. The official added that Douglas is still working out the details of his compensation package and the firm had not yet begun searching for a replacement.

Bank of Tokyo-Mitsubishi is studying the possibility of offering Asian clients credit derivative products, such as credit-default swaps, next year from its Singapore office. "There has been some discussion as well as initial studies," noted an official at the bank in the Lion City. "I'm hoping this will happen by the third quarter of next year," he added.

Citigroup Asset Management is planning to use interest-rate and cross-currency interest-rate swaps for its newly launched open-ended euro and sterling-denominated liquidity funds and could put up to 10% of its assets into synthetic securities. The fund manager will use swaps to hedge exposure and alter duration but not to leverage the portfolio's positions, said Olivier Asselin, head of the short-term duration group in London. The so-called liquidity plus funds are currently EUR10 million (USD8.8 million) and GBP18 million (USD25 million), some of which is seed capital, he expects them to grow substantially.

Goldman Sachs is structuring a USD160 million catastrophe bond for Paris-based reinsurance company SCOR Group to securitize Californian and Japanese earthquake risk and European windstorm risk, according to a cat bond analyst in New York. Officials at Goldman Sachs and SCOR declined comment. The analyst expects the deal to hit the market by early next year and is likely to be split into two three-year tranches. It is still too early to determine pricing or how the tranches will be divided.

Enron Nordic Energy is looking for buyers for its 60-member weather and power trading and sales operation. Thor Lien, managing director in Oslo, said it hopes to find a buyer in the coming days or weeks, adding, "the clock is ticking the wrong way." One head of weather derivatives in London said he would not buy the desk as it would be easier to poach the employees, adding that the desk would likely only be of value to a cash-rich player that did not have a weather or power operation and wanted Enron's well respected technology. European weather derivatives pros declined to put a dollar value on the desk.

TPG, the privately owned Dutch mail carrier with approximately EUR7.5 billion (USD6.6 billion) in assets, is examining using credit derivatives for the first time to hedge its counterparty credit risk. Lars Wickson, assistant treasurer in Amsterdam, said the company is keeping abreast of events in the credit derivatives market as a possible means to supplement other risk management techniques. The company already uses plain-vanilla derivatives, both listed and over-the-counter to offload interest-rate and foreign exchange risk. He said the company works with roughly 15 relationship banks and picks counterparties on the basis of price and credit rating. He declined to name the firms.

The Industrial Bank of Japan is structuring what is considered to be the first exotic weather derivative purchased by a Japanese gas company. "It's the first of its kind in Japan," said Hiroshi Matsui, senior manager of derivatives and fixed-income in Tokyo, pointing out that the deal combines weather, oil price and foreign exchange risk. He declined to name the counterparty.

Henderson Global Investors is planning on becoming a more active buyer of synthetic securities following the implementation of an in-house derivatives model that will allow it to compare values in the cash and synthetic markets. Daniel Beharall, head of the quantitative portfolio management team in London, said when the proprietary system is implemented, "we will really be cranking up what we're doing." Henderson manages roughly GBP11 billion (USD15.7 billion) in credit and he said, roughly speaking, the firm could have up to 10% of that in synthetic assets once the system is implemented, assuming market conditions are right. Currently Henderson has only a handful of single-name default positions.