Melbourne-based National Australia Bank, one of Australia's largest banks, is looking to issue two or three synthetic collateralized debt obligations in Australia this year as well as structure a wider array of credit products on the back of growing client interest. "We think there's growing demand for a full range of tranches," said one official.
The CDOs will likely have an Australian spin but incorporate names from overseas to diversify the product, given the relatively limited number of liquid names in Australia. The transactions will likely be around AUD1 billion (USD568.9 million). NAB stepped up its presence in the credit derivatives market last year after receiving the go ahead from regulators to actively trade the products (DW, 2/10). The official said the bank has structured one CDO before, but declined to elaborate.
In addition to marketing products such as credit-linked notes and first-to-default baskets, NAB is also looking to offer hybrid credit-linked notes. The notes will incorporate equity or foreign exchange exposure along with credit derivatives. "We're well-placed to move ahead," added the official, noting that the bank can tap overseas markets and products for its clients from its desks in New York and London.
