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Casino Guichard-Perrachon has entered an interest-rate swap to convert a EUR200 million (USD181 million) fixed coupon bond into a synthetic floater. Laurent Zecri, head of interest-rate risk management in Saint-Etienne, said in the swap the casino pays a 6% fixed rate and receives three-month Euribor plus 89 basis points. The swap mirrors the bond's size and 2008 maturity.

The University of British Columbia's CAD500 million (USD326 million) Staff Pension Plan is considering reducing its equity derivatives position and putting the proceeds into the cash market. Roger Polishak, associate treasurer, explained that the move reflects a recent decision by the Canadian government to raise the cap on foreign investments by 5% to 30% (DW, 4/30). The pension fund has a 40% allocation to non-Canadian equities with just 20% invested in the cash market and 20% in swaps and pooled funds, in order to circumvent the previous 25% cap.

Currency overlay has grown in popularity during recent years. From being an obscure and slightly risqué product it has come to be an important weapon in the institutional hedgers' arsenal. However, there is still a degree of confusion as to the precise nature of overlay, and in particular it is easily confused with currency funds, or the use of currency as an asset class.

Deutsche Bank has hired part of Citibank's equity warrants team as part of its ongoing bid to topple Citibank as the number one warrants player. Frank Langer, deputy global head of warrants at Citibank in Frankfurt, and three of his traders will join Deutsche Bank in Frankfurt at the beginning of June. The bank also plans to hire five or six sales professionals in the coming months, according to Yassine Bouhara, head of European equity derivatives at Deutsche Bank in London. Bouhara told DW in 1999 it was planning on knocking Citibank off its number one perch (DW, 4/26/99) and he believes with these hires it has gone a long way to achieving that goal.

Dresdner Kleinwort Wasserstein plans to set up a weather derivatives desk to expand its treasury risk management products by the fall. Thomas Roeder, global head of interest rates and treasury in Frankfurt, said the desk will offer weather derivatives, concentrating on marketing degree-day swaps and options to companies looking to hedge their exposure. Roeder said it is setting up the department as a response to customer requests. But he added margins are shrinking on liquid derivative products so banks are looking for new markets.

Euro/U.S. dollar implied volatility fell across the curve last week as demand to buy options dried up. Traders said the market was unusually quiet because of Golden Week in Japan, last week's May Day holiday in Europe and the run up to today's bank holiday in the U.K. One-month vol fell to 11.9% on Wednesday from 13.40% a week and a half before. Euro/dollar spot has stayed between USD0.8826 and USD0.9032 for over a month.

Dresdner Kleinwort Wasserstein is ramping up its credit, interest rate and foreign exchange derivatives capabilities in New York, and as part of this effort will opportunistically hire traders, marketers and researchers. Keith Fell, the North American head of sales and derivative marketing in the firm's global debt division in New York, said there is no timetable for the hires, but he added the bank is growing its derivatives business as part of a strategic plan to expand its global debt capabilities.

Takeshi Nakanishi, v.p.-fixed income credit products at Goldman Sachs in Tokyo, has joined Credit Suisse First Boston as a director in the fixed income division, responsible for structuring credit products. He reports to Paul Kuo, head of fixed income at CSFB. Kuo was on vacation and could not be reached. Nakanishi declined comment.

ING Barings in Hong Kong is recommending clients enter a short Singapore dollar/U.S. dollar strangle in which investors win if the currency remains range-bound. Craig Chan, currency strategist, believes that weak export figures linked to a lack of global demand, capital outflows, and belief that the Monetary Authority of Singapore will permit a depreciation of the currency could cap recent Sing strength.