Mizuho Securities plans to offer equity-default swaps and callable credit-default swaps in the coming months. On the credit-default swap side, Nishida Hidetake, manager in the fixed income and credit trading department in Tokyo, said, "The low option premiums would be attractive to customers buying protection." The firm has already designed models for callable credit-default swaps, which its risk management department is analyzing. Market officials noted that with the steady pickup in convertible bond issuance in Japan this year, end users such as hedge funds, domestic banks and insurers have been using callable asset-swaps and default-swaps to hedge positions.
Additionally Mizuho is preparing to offer equity-default swaps, which will be handled by the equity derivatives team, noted Hidetake. The move follows the increased interest in the product in Japan, demonstrated by local rival Daiwa Securities SMBC's entrance into the market earlier this year (DW, 3/21). Mizuho also structures first-to-default baskets and synthetic collateralized debt obligations.
