Sydney-based Tyndall Australia may start purchasing and selling default swaps for its AUD3.5 billion (USD1.9 billion) fixed-income portfolio. "It's something I'm considering," said Roger Bridges, fixed-interest portfolio manager in Sydney, noting that he is studying the product and is speaking to a number of banks. Bridges continued that the fund manager is still in the initial stage and will take some time before it would look to become a user, as it will first need to establish systems as well as receive internal approval. Bridges declined to speculate on a timeframe on when the fund manager will start trading.
The fund plans to trade swaps on Australian names as an additional investment tool for its domestic fixed-income portfolio. Pricing for credit-default swaps will be the most important factor for selecting a counterparty.
"Anyone joining the market is a good thing," said Pierre Katerdjian, global credit swap trader at Deutsche Bank in Sydney, adding that as more funds in Australia use credit derivatives, it will boost liquidity and foster the development of the market.
