Credit derivative traders in Asia are expecting a wider array of tradable default swap names and sub-indices to hit the market in the coming months. "There will be an introduction of new credits, which will be reflected in default swaps," said Henry Yoon, v.p. in the credit trading department at Lehman Brothers in Tokyo, explaining that impending bond issuances will bring more default-swap reference names. Simon Chiu, head of Asian credit markets trading at JPMorgan in Hong Kong, predicts between five-10 more credits will trade in the default swaps market this year. Last week for instance, credit protection on Singapore-based Temasek Holdings popped up for the first time on the back of a SGD1.3 billion (USD766 million) exchangeable bond.
The greater liquidity means indices will be able to increase the number of credits they reference. Chiu expects the Asian TRAC-X default swap index to add an extra 10-15 names to the 25 it already follows. Additionally, Chiu noted that sub-indices for the TRAC-X family will pop up for Asia this year, likely beginning with an index of Korean banking names.
