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Credit Suisse First Boston and National City Bank held a bank meeting July 25 for Cleveland-based chemical company Ferro's $900 million credit. The loan backs the $540 million acquisition of dmc2, OM Group's electronics materials, ceramics and pigments operations. It also refinances debt. The package consists of a $200 million, 364-day revolver that carries a 3/8% commitment fee, a $400 million, five-year revolver that has a 1/2% commitment fee and a $300 million six-month bridge loan. The out-of-the-box spread is LIBOR plus 2%. CSFB is the syndication agent and National City has the administration role. The credit is rated BBB-/Baa3. Officials at CSFB and National City declined to comment.

Spectrasite Holdings' bank debt traded down slightly to the 93.75 range last week, which is down from 94 1/2. Dealers say tower credits are starting to feel the weight of telecom paper. Charter Communications' bank debt traded at 99 3/8, down a quarter of a point, in a $2.5 million swap. Rumors of more cable paper coming out have softened levels, dealers say.

Commonwealth Investment Management, a division of Australia's Commonwealth Bank Group with AUD34 billion (USD17 billion) in assets under management, expects to make its first use of credit-linked notes and credit default swaps on Aussie names. Francois Kong, head of fixed interest in Sydney, said the firm is studying using such instruments particularly for its AUD1 billion high-yield fund, to hedge credit risk, as well as to gain synthetic exposure to certain credits. The investment manager plans to throw the internally seeded fund open to external investors and anticipates using credit derivatives as the fund grows.

Credit Lyonnais recently hired Sonia Lee, a credit derivatives trader at the Industrial Bank of Japan in Hong Kong, in the new position of v.p.-Asian credit trader. Lee said when IBJ's credit desk moved back to London she wanted to stay in Hong Kong. The move is understood to be part of a push into credit derivatives initiated with the recent appointment of Omar Abukhadra as global head of credit derivatives in London (DW, 7/9).

Credit Suisse Group has agreed not to hire any Morgan Stanley employees until mid-September, a move widely seen as a condition of the severance package under which John Mack, president and coo, left Morgan before joining Credit Suisse First Boston as chief executive. Human resources managers at CSFB sent a copy of the agreement, which covers employees at every level at Morgan, to recruiters last Monday. Mack did not return calls. Press officers at CSFB and at Morgan Stanley declined comment.

Deutsche Bank has recently received approval from the central bank, Bank Negara, to set up an equity derivatives operation in Malaysia. A Deutsche Bank spokesman in Singapore said the firm has received a license allowing it to enter equity swaps, equity forwards and to sell equity-linked notes in Malaysia. The German bank is restricted to on-shore transactions. An official at Bank Negara in Kuala Lumpur said it does not comment on the activity of individual banks.

A recent flurry of attention on the impact of new accounting regulations, Financial Accounting Standards 133 and International Accounting Standards 39, has highlighted two key questions. First, why should any accounting regulation affect derivatives trading? And second, has there been a significant change in trading?

U.K. fund manager Friends Ivory & Sime, with GBP37 billion (USD52.8 billion) under management, plans to ramp up its use of equity derivatives to enter or unwind positions and is looking to recruit a derivatives manager to handle the additional business. Ian MacFarlane, head of strategy in London, said the manager wants to use derivatives to temporarily change its level of participation in indices. If it decides to extend the maturity of a position it will gradually replace the derivative position with cash, allowing for better execution.

Scottish Widows Investment Partnerships is structuring a fund in which investors short a basket of 30 five-year knock-in puts linked to shares of major U.K. listed companies, such as Vodafone, Imperial Chemical Industries and Marconi. Tony Whalley, investment director in Edinburgh, said its parent company--Lloyds TSB--will purchase the over-the-counter puts. The fund, which closed last week, is aimed at retail investors.

Volumes in the basis-swap spread market doubled last week as traders entered swaps in response to the Italian treasury's announcement that it "does not rule out buybacks." Traders said the increase in volume was exceptional given that so many investors are on holiday at this time of year.