Shinsei Bank is considering boosting its credit derivatives investments, eyeing Japanese synthetic collateralized debt obligations in the coming months. "We're looking for an opportunity to build our exposure to Japanese credits," said James Mudie, deputy general manager in the structured trading division in Tokyo. Mudie continued that the bank has been an active investor in global synthetic CDOs for over a year but is looking to invest in Japanese credits as it has a greater familiarity with the names. However, it has yet to invest in any domestic structures as they are not yet available in the modified restructuring language in Japan. "We're an advocate of the modified restructuring language," said Mudie, noting that it only invests in credit derivatives with the new language, as it has become the global standard.
For a possible yen-denominated CDO, Mudie would consider investing in the equity and mezzanine tranches as they offer higher returns. He declined to elaborate on potential sizes of investments or possible structures.
