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Countrywide Securities is continuing to effect strategic hires in its MBS sales and trading operations (BW, 4/2), according to Countrywide Capital Markets President Ron Kripalani. Over the past three to four weeks, three staffers have been added to its Los Angeles headquarters: Cliff Corrall joined from J.P. Morgan Chase, James George arrived from Credit Suisse First Boston (where he came over from Donaldson, Lufkin & Jenrette), and Brian Sager joined from UBS Warburg (prior to that he was at PaineWebber). Kripalani says all three positions are new, but declined comment on the possibility of additional hires in the near term. On a daily basis, all three will report to L.A. sales manager Mac Humphries. A senior official with the firm reasons that additional hires are likely "given the amount talent available because of consolidation on Street [MBS] secondary desks" over the past year, as well as the record refinancing (and thus origination) volumes seen at parent Countrywide Credit Industries.

Market sources say Del Monte Corp. held a conference call last week with lead arranger Bank of America and other existing lenders on its six-year, $730 million credit in an effort to refinance the deal and pay down outstanding debt. The existing credit comprises a $350 million revolving credit priced at LIBOR plus 2 1/4%; a $200 million term loan "A" also priced at LIBOR plus 2 1/4%; and a $180 million term loan "B" priced at LIBOR plus 3%, according to Capital DATA Loanware. Officials at Del Monte and Bank of America did not return calls by press time.

Poland is seen as the next big Emu convergence story, which is having a predictably beneficial impact on international appetite for Eurozloty bonds. Interest has not reached fever pitch yet, but Poland's interest rate environment has much to offer for investors in search of some capital gain. Laurence Knight reports.

Russian issuers look set to re-enter the markets just as most of the rest of central and eastern Europe finishes its beginning of year financing rush. The number of fund managers that are preparing once more to look at Russian risk is relatively limited, but there is likely to be no shortage of supply from corporate issuers. Outside Russia, leading EU convergence plays such as Poland are beginning to trade more and more like credits inside the EU, with investor interest shifting to the second wave. Laurence Knight reports.

Several automobile credits are trading up, as dealers speculate that the industry may be starting to recover on better sales earnings. Hayes Lemmerz is trading 87, up from the low 80s. A $5 million piece of Tenneco Automotive's bank debt traded in the 75-76 range, from the low 70s. JL French's debt is trading in the low 80s.

The Prague Stock Exchange, in a bid to increase liquidity and investor interest, is planning to open a derivatives market in the second half of the year, according to Vladimir Ezr, secretary general deputy and director of trading in Prague. He said the exchange is awaiting approval from the Czech Securities Commission, which should happen in the coming months, before going forward with the plan later in the year. The market would consist of listed derivatives, likely for local interest rates and the index, Ezr said. He said it could encompass other products as well, though he declined to speculate given the plan has yet to be approved by local regulators.

A unit of Samsung Capital has entered into a USD200 million cross-currency swap on the back of an asset backed security it issued in the U.S. The ABS securitized won-denominated auto-installment credit, but the bond pays a dollar-denominated coupon. As a result, in the five-year swap, the special purpose vehicle issuing the securities pays a fixed Korean won rate, 7.14%, and receives a margin over U.S. dollar LIBOR.

Williams is planning to set up a credit derivatives trading operation within about the next six months. The energy and communications company is looking at managing its internal credit risk and offering liquidity to corporates, according to Jones Murphy, director, hybrid derivatives in Tulsa, Okla. It will trade plain vanilla credit default swaps and structured credit products, with the bulk of its activity being in proprietary credit structures, which Murphy declined to describe.

Société Générale is structuring a EUR500 million (USD440 million) five-year synthetic collateralized debt obligation linked to companies in the Dow Jones Euro Stoxx 50. Pierre Matussiere, head of product management for credit derivatives in London, said the terms of the transaction have not been finalized, but investors in the portfolio will likely get EUR10 million of exposure to each of the 50 names in the portfolio. SG expects to back up the portfolio by selling protection on each name in the portfolio in the single-name credit default swap market. With the market uncertain about the future direction of corporate profits, credit default swap levels are wide, offering attractive yields to investors. This environment makes the timing right for such a product, said Matussiere.

Stark Investments is considering launching a global multi-strategy arbitrage fund next month in an effort to reach smaller institutional clients, including foundations and endowments. The Milwaukee-based firm, which manages some USD1.6 billion in assets split between high-net-worth and institutional clients, initially would seek to raise USD25 million in its first opening of the fund, which is set to be launched May 1, said Chris Greer, managing director of sales and marketing. The fund would use strategies including convertible and risk arb.

Options derive their value from underlying assets. In the case of traded underlyings, the option value is affected by the asset liquidity. The impact of liquidity on equities and bonds is a well-known phenomenon: selling the asset pushes the price down, buying the asset moves the price up. Option hedging is nothing but selling and buying some quantity of the underlying asset. Liquidity can be viewed as part of a chain reaction in hedging: changes in the asset value result in the option owner re-hedging which in turn impacts the asset's liquidity and so on. Therefore, liquidity has to be taken into account when pricing traded options.