The first property swap was executed by Eurohypo and Deutsche Bank between two matched counterparties two weeks ago. An insurance company will pay the returns of the Investment Property Databank index to a property company. The deal has a notional value of GBP40 million (USD75 million) and the maturity is three years. Ed Stacey, managing director in derivatives at Eurohypo in London, declined to name the counterparties.
"We have had interest from other prospective counterparties," said Stacey, who added, "I would not be surprised if we could get [another deal] done in one month or so." Future trades will likely to continue to be matched between counterparties, according to Stacey. "There's a lack of interest from the banks to warehouse product they can't hedge," he explained.
