The tight credit spread and low volatility in Asia is spurring new products for the region, one of which is CPPI-linked structures. "CPPI could be a transforming product for the credit markets," said Aditya Rana, executive director at Morgan Stanley in Hong Kong. Rana said CPPI-linked credit structures are emerging that incorporate long/short credit positions, which allow investors to get a carry from the long position plus receive the benefits of spread widening while allowing them to shift to more cash if the portfolio quality weakens. He thinks principal protected CPPI-linked credit products should gain acceptance in the region. "This will have appeal to middle bank and retail markets," said Rana, noting that he expects retail structures to take flight in Hong Kong in the coming months.
CPPI Credit Structures To Take Flight In Asia
