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Credit Suisse First Boston has hired several senior staffers from J.P. Morgan Chase. Klaus Said, a senior fx official at J.P. Morgan Chase in London, has joined CSFB as global head of foreign exchange, money markets and precious metals. Previously the three areas were all dealt with in separate departments. They were put together because the products behave in similar ways and there are also cross-selling opportunities, according to a senior CSFB official in New York. Said could not be reached.

A European bank last Wednesday purchased a one-touch dollar/yen option that pays out USD20 million if the spot rate hits JPY170 in the next 12 months. One trader at a U.S. bank in London said this was the largest barrier option to trade in the last five years. Spot dollar/yen was trading close to JPY120 and 12-month implied volatility was at 13% when the deep out-of-the-money one-touch traded through the broker market.

Dresdner Kleinwort Wasserstein last week put all its cash and derivative interest rate-driven products under one roof in order to be more competitive. The new department combines interest-rate derivatives with government, agency, repo and money market trading, according to Thomas Roeder, global head of interest rates and treasury in Frankfurt.

Dresdner Kleinwort Wasserstein expects to issue within the next two months its version of a synthetic collateralized loan obligation, dubbed a Promise deal, being pushed by German state-owned bank Kreditanstalt für Wiederaufbau. Jeremy Vice, head of credit derivatives and secruitization at DrKW in London, said the transaction will be similar in size and structure to the IKB Deutsche Industriebank and HypoVereinsbank transactions that came to market late last year (DW, 12/24). The IKB deal, which was lead managed by Merrill Lynch, had a notional size of EUR2.5 billion (USD2.3 billion) and the HypoVereinsbank deal weighed in at EUR1.1 billion (notional).

Pequot Capital Management, with approximately $14 billion in assets under management, is opening offices in London and Taiwan. A spokesman confirmed the move, but declined to elaborate, according to DW sister publication Alternative Investment News.

German technology companymg technologies is considering entering a swap to hedge the interest-rate risk on a floating-rate loan it took out last month. Andrea Neuroth, assistant treasurer in Frankfurt, said it would pay fixed and receive floating in the swap. The corporate took out the loan to finance the acquisition of Sylachim, a manufacturer of active drug ingredients, by its subsidiary Dynamit Nobel. Neuroth said the loan was in the millions of euros and did not cover the whole of the purchase price. She declined to name the lender, or detail the size of the loan or the interest rate it pays. An analyst estimated Sylachim cost approximately EUR150 million (USD140.4 million).

A U.S. fund manager is tentatively planning a fund that will gain market exposure solely via fixed-income swaps. The new fund would be managed by the same Pittsburgh-based professionals who run Lumin Asset Management, which advises equity fund Long Term Global Equities. An official close to Lumin said the fund will launch in about six months, pending legal and regulatory approval. The vehicle has not yet been named. The official declined to elaborate on what derivatives strategies the fund might use or why now is a good time to consider launching such a fund. The official said that an advantage of fixed-income swaps is that they provide access to fixed-income cash flows not directly available in the bond market.

Japanese corporations are selling out-of-the-money equity calls "with a vengeance" to beef up their cash flows ahead of the coming fiscal year end, according to equity derivative traders in Tokyo. Traders said corporates typically are selling one-month maturity options and rolling over the positions each month. Several hundred million dollars (notional) of trades have been executed in the last month, another trader in Tokyo added. They declined to name corporates that have been shorting calls.

Waddell & Reed is buying euro-dollar bonds on the view that the euro is oversold and will recover in the next several months, according to portfolio manager Jim Cusser. Cusser, who manages some $800 million for the firm, bought into the recent Freddie Mac reference note euro-dollar tranche, buying some eight to $10 million worth of the 4.50% of '04 (Aaa/AAA). Financing this with a sale of shorter maturity CMOs, he reasons that the non-callable structure, coupled with the euro's current valuation of $0.93, will offer an excellent total return. He notes that although the paper has backed up slightly to yield 4.65%, with a Federal Reserve inclined to ease, the curve will steepen and paper will trade inside 4%.