Singapore's Straits Lion Asset Management is considering entering credit and equity hybrid notes because the current tight credit spread environment has made traditional credit derivative products less appealing. Lye Thiam Wooi, head of global markets, said the asset manager, which has over SGD24.8 billion (USD14.8 billion) in assets, is eyeing structured notes that offer credit exposure likely via a default-swap index along with exposure to regional equity markets such as Singapore, Japan, or Hong Kong. "If spreads remain tight I expect that later this quarter and continuing to next year there will be a lot of investors looking at combining credit and equity structures," he added.
Straits Lion manages a handful of cash and synthetic collateralized debt obligation portfolios including the first-ever Singapore-dollar managed CDO (DW, 8/20/04). The fund manager is also eyeing cash or ABS-linked deals but is currently shying away from synthetics given that spreads have remained tight in the region since the last quarter. "We're not going for normal synthetic CDOs for a while," Lye noted.
