Nomura Advisory Services Malaysia is considering structuring the first ringgit-denominated synthetic collateralized debt obligations in Malaysia, the first of which could hit the market next year. "This is something that we'd definitely like to develop," said Steve Clayton, managing director and head of debt capital markets and investment banking in Kuala Lumpur. The move follows the beginnings of a cash CDO market earlier this year.
Synthetic CDOs would be attractive as many domestic investors want to have greater access to Malaysian names, such as Petronas, whose bonds are closely held. "There's a hunger for AAA names," said Clayton, explaining that with limited issuance there is pent-up demand for highly-rated and well-known credits.
An official at Deutsche Bank said that while it has been selling credit derivatives in Malaysia, it would take time before the market is ready for synthetic CDOs.
