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Taipei-based securities firmsGrand Cathay and Polaris Securities have recently received approval from the Securities and Futures Commission to use convertible asset swaps.

The international department of Taipei-based securities house Fubon Securities is looking to structure notes that combine components of fixed income and equity derivatives to provide a leveraged capital guaranteed product with leverage. "No one has done this yet in Taiwan," said Chi Huang, v.p. in the international department.

U.S.-based monoline insurer XL Capital Assurance is seeking regulatory approval to structure collateralized debt obligations in London. XL has hired Sohail Rasul, collateralized debt obligation structurer at J.P. Morgan in London, as managing director in the structured finance group. He will help with the application to the U.K.'s Financial Services Authority, according to a company spokesman. Rasul starts today and reports to David Czerniecki, senior managing director and head of structured finance in New York. Czerniecki referred calls to the spokesman. Rasul was on gardening leave and could not be contacted.

Dresdner Kleinwort Wasserstein and Credit Suisse First Boston separately are considering structuring the first publicly rated collateralized fund obligations on portfolios of hedge funds investments.

Commercial banks and investment banks are squaring off amid the Financial Accounting Standards Board decision to reassess a ruling that loan commitments aren't considered derivatives. FASB is now reassessing the ruling as a result of pressure from investment banks, including Goldman Sachs, which went on the offensive in April to convince the board that the definition of a derivative should apply to credit arrangements. FASB insiders said Goldman laid out "persuasive arguments" as to why more loan commitments meet the definition of a derivative. They are aware of the problem banks may have with any change, but would be looking strictly at the technical aspects of the issue.

Fremont Investment Advisors, a San Francisco money management fund, has raised some $8.5 million in cash which it plans to invest in euro-denominated corporate debt and 30-year TIPS. Sandie Kinchen, portfolio manager of about $125 million, says she is waiting for the euro to stabilize before she invests. She says there is no particular level that would trigger a move, merely that it would have to stop declining in value. Companies she likes include Deutsche Bahn Finance, which she notes is a stable, old-economy credit. The moves will come out of the firm's $85 million global fund, which, at a 5.34 duration, is short the 5.87 year J.P. Morgan Government Bond Index.

Does the bank debt market lead to the good life? Depends on who you ask. One market veteran remembers his early years: "I'd get home from work at 9 every night, pass my wife in the hall and we'd say to each other, 'Why are we doing this?'" The answer was to get their dream home, which they now have and say was worth the toil. Still, life on a trading desk can come at a price. Some dealers are fueled on the promise of early retirement, but acknowledge the risk element of their job and say it's taxing on the mind and body. "At 25, I was still fully human," one 30-something trader recently quipped. "Now I get up in the morning and it sounds like Rice Krispies."

Northern Capital Trust has drastically shortened its duration toward its benchmark, the Lehman Brothers Government corporate index, and will remain short as long as the spread between Treasuries and underlying inflation remains compressed, says Greg Sweeney, portfolio manager with the Fargo, N.D.-based investment management firm. Meanwhile, Northern Capital is buying corporate bonds 20% shorter than the benchmark.

This chart, provided by Citibank/Salomon Smith Barney Inc., tracks bid-ask prices for par credit facilities that trade in the secondary market. It also tracks facility amounts, ratings, pricing and maturities.

Confident that the Federal Reserve easing policy has set the foundation for an economic recovery, Wells Capital Management will increase its MBS allocation by $100 million through the sales of some treasury bonds. In addition, and for the same amount, the firm will be moving down the credit spectrum on its corporate allocation in order to capture more yield, says Paul Single, portfolio manager with the San Francisco-based asset management firm.