Synthetic collateralized debt obligations containing pockets of emerging market credit are gaining ground in Asia as investors look for alternatives to traditional products to meet yield targets. "Clients are looking away from corporate investment-grade assets," said a structurer at a European house in Hong Kong.
An official at Deutsche Bank concurred interest has been picking up, but noted clients are making different allocations to the emerging market space including Eastern Europe, Latin America and some Asian markets, depending on their level of comfort. "We're seeing a real mix, in some portfolios this makes up a significant minority of the credits while in other structures emerging market names make up a significant majority, up to the 60-80% range," said the official.
