HSBC in Asia has just wrapped a first-of-a-kind medium-term note linked to two credit indices and incorporating constant proportion portfolio insurance. The structure is novel in that it references both the CDX and iTraxx Europe credit indices. It consists of USD52 million in notes with a seven-year maturity.
"It's all about diversification," said an official close to the deal, noting the structure provides exposure to the two primary credit-default-swap markets, the U.S. and Europe. Additional deals employing this concept are expected in the coming months. Credit structurers at HSBC declined comment.
The bank has been boosting its presence in the credit derivatives market, following a major build-up in this area last year in Hong Kong (8/12).
