Seoul-based Hana Bank, with over KRW76 trillion (USD63.7 billion) in assets, is looking at investing in synthetic collateralized debt obligations for the first time as a way to boost yield for its investment portfolio. "This could help us pick up yield," said H.B. Kim, derivatives dealer. Kim continued that the firm is now studying such products and could enter the market within three to six months, likely for a CDO that encompasses a mix of Korean and foreign credits. "I'm calling them immediately," said a fixed income sales specialist at Crédit Agricole Indosuez.
He noted that the tranche selected in such an investment will likely depend on the global credit outlook in the next several months. Kim said that if there is a clear trend that the global economic and credit outlook is improving in the coming months, Hana may consider investing in a mezzanine or even an equity tranche. However, if the credit outlook remains unclear, he said the firm will likely select a higher rated tranche. He declined to comment on potential investment sizes or further elaborate on potential transactions.