Daehan Fire & Marine Insurance, with over USD700 million in assets, is gearing up to purchase credit derivatives for the first time. "We're looking at credit-related instruments for the new fiscal year," said Sei Young Park, manager of the investment department in Seoul. Daehan plans to purchase credit-linked notes or tranches of synthetic collateralized debt obligations for its USD400 million fixed income portfolio. The insurer will start out small, likely USD5-10 million. Daehan traditionally reassesses its asset allocation at the onset of the new financial year, April 1, explained Park.
Daehan is looking at credit products rated BBB plus or higher and will likely first invest in products referenced to domestic names but will also consider products on global credits. The insurer has used foreign exchange derivatives in the past for fixed income portfolio to swap dollar-denominated Korean bonds into won, said Park.
