Major asset managers in Thailand, including SCB Asset Management and Kasikorn Asset Management, are looking at offshore products such as synthetic collateralized debt obligations on the back of recent deregulation. Two weeks ago the Bank of Thailand announced it would ease exchange control regulations to allow institutional investors access to offshore markets.
Bryan Yap, co-head of emerging markets Asia; fixed income and derivatives trading at Deutsche Bank in Singapore, said, "While there still needs to be further clarification from the regulators, this will boost business for everyone."
Yap anticipates that the majority of fund houses will initially wade into the credit mart by investing in more vanilla-type instruments. "I expect asset managers to look at the credit market one step at a time--from single-name bonds and CDS, to baskets, to CDOs.
SCB Asset Management, a subsidiary of Siam Commercial Bank, with THB220 billion (USD5.24 billion) in assets is already considering purchasing synthetic CDOs. Chukiat Pitisirunjaroen, manager in the investment department in Bangkok, said the firm is now gathering research material from several foreign houses in regards to the product. "They offer attractive yields," said Pitisirunjaroen. He continued that while it is in the initial study phase, it would likely look at tranches rated BBB plus or higher for its THB10 billion fixed income portfolio.
Kasikorn Asset Management, formerly known as Thai Farmers Asset Management, with THB140 billion under management, is also studying a wide array of products. "We're looking at opening up into new areas," said Yingyong Nilasena, first senior v.p. in fixed income in Bangkok. Nilasena said that the firm is also studying investing in credit derivatives offshore.
While the firms have invested in credit-linked notes on domestic names onshore, the officials noted that all external investments will require approval from the Securities and Exchange Commission.
