Funds trading credit derivatives in the region have been gaining momentum in recent months on the back of the more developed market. For instance, Tribeca Global Investments, the hedge fund arm of Citigroup, has been setting up a credit derivatives trading unit in recent months in Singapore and hired Aashish Ponda, credit derivatives structurer at UBS in the Lion City, to spearhead the effort. Market insiders said the fund will look at trading default swaps as well as credit-linked notes and may potentially manage CDOs. Ponda declined all comment.
UBS' Dillon Read Capital Management in Hong Kong is also expected to rev up its activity in the regional credit markets, noted officials, as the former principal finance group in UBS was recently spun off. "A lot of players traded out of other offices, but the credit market is becoming liquid enough to allow for dedicated operations," said a fund manager, explaining that he expects additional entrants to pop up in Asia this year. New York-based Amaranth Group has also been expanding its presence in Asia, noted market participants.
A credit head at a bulge-bracket house said he also expects default-swap activity to pick up on the back of the growing number of private leverage financing deals in the region. Funds could purchase credit protection to hedge such transactions, he noted.
