Constant proportion portfolio insurance is catching the eye of conservative credit investors. Credit derivative structurers and salespeople say inquiries for CPPI have surged over the last month as more asset and fund managers join the mix.
The interest has been triggered by credit spreads moving toward five-year tights, which is forcing investors to find juice in non-traditional structures. CPPI is particularly appealing to less aggressive investors because it features capital protection.
"About 70% of the calls we've taken from clients over the last month have been about CPPI," said one London-based synthetic credit official. "Until spreads widen out I expect this to continue and grow."
