Invicta Credit, a credit derivative product company backed by Massachusetts Mutual Life Insurance Company, expects to do its first trade within the next few weeks. Operated by MassMutual subsidiary Babson Capital, the firm will sell long-dated protection on credit rated AA and higher. This will include corporate and asset-backed synthetic collateralized debt obligations as well as single-name ABS credit-default swaps and CDS on CDO tranches.
Ian Hawkins, president of Invicta in Springfield, Mass., said MassMutual and Babson had initially planned to launch a monoline insurer. "During the process, we decided that a CDPC would be the best way to participate in this market," he said. Invicta is currently in talks with around 20 counterparties and has been rated AAA by both Derivative Fitch and Standard & Poor's.
Hawkins joined the group when the monoline was being planned about three years ago and before that was head of product development for WestLB's capital markets group in the Americas. Invicta is staffed by three people in total with backgrounds in capital model management and surveillance.
The firm will lever off of MassMutual's resources for overhead costs, which distinguishes it from competitors, Hawkins added. Lower costs means the firm can weather the tight credit spread environment longer than competitors and can be patient with regards to entering into investments, Hawkins noted. Access to bond analysts across MassMutual's offices is also an advantage for Invicta.
