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NIB Capital Asset Management plans to launch alternative investment products for its institutional investor clients. Willy Simon, advisor to the board in Utrecht, said it is looking at buying a hedge fund manager or a fund of funds within the next six weeks. The hedge fund managers will be free to use derivatives.

Bond Street Capital, an Englewood Cliffs, N.J.-based hedge fund specializing in managing distressed debt portfolios, recently bought five-year credit protection on auto equipment supplier BorgWarner. Sam Kim, a senior analyst at the hedge fund, said he made the trade because he believes the current auto slowdown in the U.S. is likely to be a long-term situation and auto suppliers, such as BorgWarner, are likely to lose their investment-grade rating. Another reason for the trade hinges on Kim's expectation that BorgWarner's credit is trading much tighter than it should be in light of continued widening of auto names.

Lehman Brothers is recommending investors enter long U.S. dollar/Japanese yen implied volatility positions because volatility has dropped to its lowest level in more than a year. Anne Sanciaume, foreign exchange strategist in London, said "people rushed to buy volatility as an asset class [after Sept. 11] and it is true that things have not gotten worse, so people have been unwinding these long volatility positions." However, Sanciaume believes investors are over-confident and have gone back too far in unwinding these long vol positions. One-year dollar/yen implied vol was 10.3% last Tuesday, close to lows set last summer. Sanciaume considers fair value to be around 11.5%.

Robert Rossman, head of interest-rate derivatives marketing at Credit Suisse First Boston in New York, left the firm abruptly on Tuesday, according to a headhunter. Rossman joined CSFB earlier this year from J.P. Morgan where he was head of swaps marketing for the Americas.

The Japanese credit derivatives market started to quote credits with the International Swaps and Derivatives Association's modified restructuring language Monday, after most dealers had agreed on this date. Market makers expect this to boost end user participation and Manabu Yokitomo, deputy manager of credit derivatives and structured finance at the Tokio Marine & Fire Insurance Co. in Tokyo, validated their claims. He said, "we're hungry for Japanese names and will look to invest as soon as the modified restructuring language is common," said Yokitomo. "We'll be more comfortable in investing in Japanese names [under the new language]," added Yokitomo. The insurer already sells credit protection in Japan and uses the modified language on U.S. and European names.

High-net-worth clients of Banque Banorient (Suisse) recently have been selling U.S. dollar calls/Swiss franc puts, on the view that the dollar will weaken from the highs it set earlier this month when U.S. equity indices rebounded to near or past their pre-Sept. 11 levels.

Société Générale and Dresdner Kleinwort Wasserstein are both structuring arbitrage synthetic collateralized debt obligations as a result of accelerated credit spread widening following the Sept. 11 terrorist attacks. The SG deal will be EUR1 billion (USD904 million) and DrKW's will be USD1 billion, according to officials at the firms. Both deals will have a five-year maturity.

Swiss Re Financial Products is looking to beef up its credit derivatives team in New York, according to market officials. The firm recently hired Steven Olentine, credit derivatives marketer for U.S. clients at Morgan Stanley, as a structured credit derivatives salesman in New York. Olentine was the first of at least five more hires the firm is looking to make over the next several months as part of an ongoing push into the credit derivatives market, according to headhunters. "Swiss Re is really taking the lead in the move by a lot of reinsurance companies to get a stronger foothold in credit derivatives," said one market professional. Olentine and a spokeswoman at Swiss Re did not return calls.

Société Générale has received approval from Taiwan's Securities and Futures Commission (SFC) to issue exchange-traded warrants and other firms, including Deutsche Bank and ABN AMRO, are looking to join the fray. The SFC next month will change regulations to allow banks, as well as securities firms, to apply for licenses. Previously Merrill Lynch--which received approval in 1999--had been the only foreign securities house to issue warrants, said Kathy Lu, an official at the SFC in Taipei.

The Institute of Certified Public Accountants of Singapore approved an accounting standard for derivatives similar to the ones introduced by the Financial Accounting Standards 133 in the U.S. and the International Accounting Standards 39. The statement was passed in July 2000 to become effective for financial periods beginning on or after July 2001.

New Era Life is poised to start buying and selling credit derivatives for the first time via the use of baskets of credits for hedging and investment. Jeffrey Chen, portfolio manager in Houston, said the insurance company is likely to pull the trigger on its first deal within the next three months. "There are a lot of regulatory issues involved with regard to income taxes and accounting to be looked at before we start selling and buying baskets of credits because we are an insurance company," Chen added. New Era has been talking to structured products experts at both Lehman Brothers and Merrill Lynch about using credit-default swaps. Discussions about entering the credit-default swap market arose from New Era's use of CDOs and its consultation with Lehman and Merrill about new products.