Schroder Salomon Smith Barney is looking to add one or two credit derivatives traders in London to meet increasing deal flow. Iftikhar Ali, head of the four-person default swap trading desk in London, said he plans to build the team because he expects this year's unprecedented growth and volatility in the credit derivatives market to continue next year as more end users and banks enter the market. He also predicts a healthy pipeline in the European cash bond market in the first quarter, which will lead to greater demand for protection.
"The number of customers who have asked us for educational material has increased and we anticipate that will materialize [into new business]," Ali said. In particular, he expects financial institutions, such as fund managers, to use more credit derivatives. Henderson Global Investors (DW, 12/3) and Schroder Investment Management (DW, 11/26), are among those European buysiders planning to enter the fray.
Ali added the credit derivatives market has passed important thresholds such as the Railtrack and Swissair defaults, and he expects end users to see it as a viable market and turn to it as credit quality deteriorates further. "We're seeing more bankruptcies in the European corporate market and now the precedent has been set," he noted.
