Activity for longer-dated credit-default swaps in Australia is on the rise, due to the growing number of local accounts looking for yield in the tight-spread environment. "Liquidity in the back-end of the market has definitely picked up," said a dealer at a major domestic bank in Sydney.
Officials said as more domestic funds have been getting mandates in place, coupled with offshore CDO issuance incorporating Aussie names, interest for seven and 10-year trades has been picking up steadily. A credit official at a bulge-bracket house noted that given the tight level of spreads in Australia and lower volatility than Asia, U.S. or Europe, investors have been looking for ways to pick up yield.
