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Korean cross-currency interest-rate swap spreads are expected to widen over the next month as more than USD1 billion of asset-backed bonds come to the market. Kookmin Card, LG Capital, Hyundai Card, Samsung Capital and Samsung Credit Card all plan to issue asset-backed securities, according to traders, who added the companies intend to enter swaps to hedge their foreign exchange and interest-rate exposure. "The ABS market is hot in Korea," noted one interest-rate trader. He added that ever since the success of the first off-shore ABS transaction by Samsung Capital in April corporates have been lining up to execute similar deals (DW, 4/8).

The first swap agreement took place between IBM and the World Bank in the early 1980s. Since then sophisticated products have been developed to meet the needs of capital markets players searching for higher returns for investors and more efficient hedging tools as well as offering new financing means for international companies. In order to handle these new complex products and to manage their risk, a range of pricing models have been introduced over the last few years.

Taiwan Life Insurance, with over USD2.1 billion in assets, is considering purchasing structured products such as structured notes, synthetic CDOs and equity-linked notes. Jenny Chen, financial products fund manager in Taipei, said the insurer is now considering structured products to obtain enhanced yield. She continued the insurer is submitting an application to the Ministry of Finance, as insurers are currently not allowed to invest in products such as CDOs. Johnson Lai, head of finance in Taipei, believes the MoF will likely acquiesce as insurers and several international investment banks are lobbying it, and Taiwan Life will be able to invest in these within six months. Calls to the MoF were not returned. One market official in Hong Kong said that although his bank is not directly speaking to the MoF, he knows of several insurance companies in Taiwan that are in talks, adding the rules could change within two or three months.

Singapore-based asset manager Kenrich Partners is considering buying its first equity-linked note. Richard Loh, managing director at Kenrich, said the firm is looking into using the structured products but added that no time frame has been established. "We're still in discovery, no conclusions have been made yet," added Loh. Kenrich would first establish criteria to follow, and then make its decision on whether to invest in the product, said Loh, declining to elaborate.

William Blair Investment Management is seeking to sell $100 million of off-the-run eight- to 10-year U.S. Treasuries in order to purchase lower quality triple-B rated corporates. The move will reduce duration to 85% that of the firm's benchmark, the 3.75-year Lehman Brothers Government/ Corporate index. Bentley Myer, portfolio manager of $2 billion in taxable fixed-income, says he needs to see consistent job growth of 100,000 to 150,000 per month and signs that weekly jobless claims will stay below 390,000 and continue to decline, before he makes the shift. In addition to using the cash from the sale of Treasuries, the firm may buy corporates with some of the money it raises through refinancing of mortgage-backed securities, or it may keep that money in cash.

Wright Investors Services is pondering adding up to 5%, or $125 million, to its mortgage-backed securities allocation. James Fields, portfolio manager who manages $2.5 billion at the Milford, Conn. firm, says he is waiting for 10-year interest rates to stabilize near 5%, 30-year mortgage rates to go above 7%, and an improvement in corporate earnings, before making the move. Fields says he has been buying 15- and 30-year 6.5% and 7% paper, but will look at 7-7.5% bonds as rates begin to rise, in order to take advantage of a lower prepayment risk environment. He says the firm mostly owns Ginnie Mae bonds, although he says he has been adding Freddie Mac and Fannie Mae pass-throughs recently, as they have widened relative to the federally guaranteed Ginnie paper. Fields says the firm will likely sell five-year Treasuries to finance the move, as Treasury yields have been quite low recently given the broad-based fixed-income rally, and he wants to stay close to Wright's bogey, the 4.6-year Lehman Aggregate index.

It is not just Wall Street's investment banks feeling the pinch of global recession, as the banker to Britain's Queen Elizabeth, Coutts & Co, is to advertise for the first time in its 309-year history. "We really believe our clients are not going to think this is going downmarket," said spokeswoman Julie Cooper. "This is not saying come to Coutts, anyone can join Coutts." Some are worried the approach could upset the more conservative customers. "I hope our clients won't choke on their cornflakes," Coutts CEO Andrew Fisher told the Daily Telegraph. Customers will still be required to hold disposable funds of $730,000 to open an account.

The Deal Roll-off Chart, provided by Capital DATA Loanware, lists the 50 largest leveraged credit facilities in the U.S. market that are due to mature in the coming month. It is designed to provide a look at potentially available money in the market as credits are renewed or retired

The high-yield team at OppenheimerFunds has been swapping out of traditional cash pay bonds in the cable and telecom sector, and buying zero coupon bonds. Portfolio manager Tom Reedy, manager of $7 billion, says that several zeros in this area are currently trading at deep discounts, and he has been putting on this swap trade in names including Crown Castle International (B3/B), NTL (B3/B-), and Telewest Communications (B2/B).

UBS Warburg and Bank of America are hitting the market with a five-year, $6 billion term loan backing Devon Energy's purchase of Calgary-based independent senior oil and natural gas producer Anderson Exploration. The price of the Anderson purchase is $4.6 billion, but the financing package also covers the cash portion of the acquisition of Mitchell Energy & Development, announced last month. Retail syndication of the deal will launch in mid-October. The co-leads started approaching close relationship banks Friday.

Wyndham International's term loan "B" traded up to 99 1/8, while the increasing rate loan (IRL) traded at 991/ 4 last week. The "B" was at 97 a day before the trade, while the IRL was at 98. Some dealers are confused over an uptick in levels that's based on market speculation. For a while the market chattered about a possible takeover by Bass Hotels, but no confirmation has been released. "I think it may just seem more concrete to people," said a trader. The hotel operator is based in Dallas.