Singapore's Pacific Asset Management, which runs USD200 million in assets, is gearing up to trade credit-default swaps for the first time. "We're re-writing the prospectus," said Desmond Soon, investment manager in the city state, noting the firm will include CDS as a trading tool for its total-return fund. Soon added the fund will predominantly sell credit protection on Asian names as an alternative to cash trades.
The fund has been looking at trading the instruments for the last couple of years but only now are certain clients willing to accept credit derivatives as a way to enhance yield. Pacific Asset will start out slowly, with default-swap trading likely accounting for 10% of total positions. The fund will begin trading in the next month or two. Soon noted the firm is concentrating on speaking to clients about CDS before it looks into selecting trading counterparties.
