Cathay Life Insurance, Taiwan's largest insurer with over USD35.4 billion in assets, is considering trading credit derivatives for the first time for its over USD3 billion international fixed income portfolio. "We've been studying lots of articles and reading info from counterparties," said Alex Chang, fixed income analyst in the international investment department in Taipei.
Cathay Life has been eyeing such products as synthetic CDOs (DW, 3/31) and credit-default swaps since last year but Chang said it will be several months before it takes the plunge. "We are very cautious," added Chang. He continued that as the insurer focuses on investing in highly-rated debt and mortgage-backed securities, it would require credit products to be rated single A or higher. He declined to single out potential counterparties or comment on investment sizes.
