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Once frozen out from the international capital markets, Scandinavian corporates are these days more free to venture beyond their home region for funding. No longer able to rely on local reputation, the Nordic companies are learning to court investors and rating agencies to bring truly international deals. What these deals lack in size they make up for in quality, and, as Philip Moore discovers, both domestic and bulge bracket banks are jostling for the business.

Samsung Life Insurance, one of the largest insurance companies in Korea, recently purchased a credit-linked note from Deutsche Bank in Seoul. The USD30 million note is believed to have been structured by Deutsche Bank's Hong Kong office via a special purpose vehicle, according to a trader in Seoul. Further details of the transaction could not be determined by press time, but the trader noted this type of transaction is unusual in the Korean market. Officials at Samsung Life and Deutsche Bank declined all comment.

Spread levels of five-year protection on Cendant Corp. tightened considerably last week in response to the success of the company's USD800 million convertible bond issuance. Before last Monday's issue, spreads on New York-based Cendant were at around 230/260 basis points, according to Greg Rosen, director, credit derivatives trader at Credit Suisse First Boston in New York. After Cendent tapped the market those levels narrowed by about 65bps, and by the day's end they were trading at 180/210 bps. On Wednesday, default spread levels were holding steady at 180/200bps, said Rosen.

Investment trust corporations (ITCs) in Korea are expected to jump into the country's interest-rate swap market soon, after getting the green light to transact April 24 from the Financial Supervisory Service (FSS), according to swappers and asset managers in Seoul. Traders said ITCs, some of which have up to KRW5 trillion (USD3.8 billion) in bond portfolios, will start using swaps as early as next month. Market officials said although Korean insurance companies and local banks already use the OTC swap market, the regulator had previously barred ITCs because of their lower credit ratings.

Royal Bank of Scotland Financial Markets shocked the sterling interest-rate swap market last week by reportedly snatching a chunk of swap business from co-book runner Citigroup on behalf of Welsh Water, which was looking to unwind a hedge. "There was blood in the waters," commented a senior swapper at a rival firm, noting that taking business from a co-book runner is taboo. "There is normally a gentleman's agreement," said another. Citigroup units Citibank and Schroder Salomon Smith Barney had agreed to share interest-rate swap and bond underwriting duties, respectively, with RBS, according to officials at the firms. Officials at the firms denied any bad blood on the deal.

Rabobank has hired Jean-Marc Debricon, portfolio manager for structured investments and credit derivatives at the European Bank for Reconstruction and Development, as director in the structured credit trading group in London. Mark Lauber, executive director and senior structurer at Rabobank in London, said Debricon will join the group as a structurer of both cash and synthetic credit products next Monday. Rabobank is adding this position as the structured credit products market as a whole grows. Lauber thinks the Dutch bank is in a good position to take advantage of this growth because of its AAA/Aaa rating. The hire brings the number of credit structurers in London to five. The bank also has three traders in its London office. He will report to Mark Northway, global head of structured credit trading.

James McNab, a credit derivatives trader at UBS Warburg in Singapore, will join ABN AMRO in Singapore. McNab will report to Zafar Alam, senior v.p., head of credit trading and local markets, Asia. Alam noted that McNab will soon be on board, declining to elaborate. McNab could not be reached.

Barclays plans to hire derivatives conversant investment advisors in its London private banking office. Mercedes Paratje, global head of investment advisory in New York, said the recruits will advise high-net-worth individuals on investment opportunities and strategies, including investments and hedges which use derivatives. The recruits will report to Olivier Zucker, head of investment advisory in London. Zucker said he expects the hires to be on board early next month.

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.