Bangkok-based Thai Farmers Asset Management, the asset management arm of Thai Farmers Bank with over THB130 billion (USD3.1 billion) under management, is looking at investing in equity-linked and credit-linked notes within six months for the first time, according to Yingyong Nilasena, first senior v.p. of fixed income in Bangkok. "With interest-rates heading down this year, we're looking for enhanced yield," said Nilasena.
In recent months, the asset manager has started using asset swaps to strip out the equity component in convertible bonds. The fixed-income fund is not permitted to invest outright in convertibles but Thailand's Securities and Exchange Commission allows the manager to invest in the debt portion if it strips out the equity component with derivatives. As for equity-linked notes, "We're looking at a variety of structures," said Nilasena. It will likely focus on index-linked notes, but will consider option-embedded notes.
The asset manager will focus on notes linked to domestic names or indices. "We'll likely start with a small portion," said Nilasena, adding that the asset manager will probably begin investing around USD10 million per transaction on structured notes.
Thai Farmers Asset Management selects counterparties on the basis of pricing and on the attractiveness of the deals. It has a minimum counterparty rating requirement of single A, said Nilasena.
