U.K.-based credit derivatives investors are asking credit shops for sterling-denominated synthetic credit instruments referenced to indices. Daniel Beharall, director of tactical fixed income at Henderson Global Investors in London, said he would like to invest in such liquid products, but investment banks do not offer them as yet.
Lee McGinty, v.p. and head of global credit-default swap index research at JPMorgan in London, said the firm has been looking at the potential to develop sterling-denominated products based on the TRACX credit-default swap index developed jointly with Morgan Stanley. "We have been speaking with investors to find out if they are looking for something that is just denominated in sterling or has a bias toward U.K. names," he said. McGinty noted, however, that JPMorgan is looking at a whole variety of products developed around the TRACX index.
A quick fix would be to structure a sterling denominated product on an existing index. Andrew Feachem, structured credit marketer at ABN AMRO in London, said the firm could structure a sterling-denominated credit-linked note for an investor that would give it exposure to the iBoxx index.
