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Derivatives

Quotes Of The Year 2006

"The game will be equity--that's where the value is."--Aditya Rana, executive director at Morgan Stanley in Hong Kong, on an uptick in demand for equity tranches of synthetic collateralized debt obligations, as range-bound spreads make the first-loss tranche more attractive to investors (DW, 1/23).

 

"If it catches people's imagination, this could shoot the lights out."--Alex Robinson, head of wealth distribution at Barclays Capital, talking about launching an investment product which leverages the returns of an agriculture index (DW, 1/30).

 

"It's unbelievable how many people want this trade."--Todd Kushman, managing director and product specialist for derivatives of asset-backed securities at Bear Stearns in New York, commenting on high levels of interest for super-senior tranches of ABS when leveraged (DW, 2/20).

 

"The process has become teeth-pullingly lengthy from some investors, but they are doing the right thing."--David Peacock, co-head of structured credit at Cheyne Capital in London, on investors increasing due-diligence of structured credit managers (DW, 3/6).

 

"If someone doesn't know what that stands for they must have been asleep in '05."--Justin Kennedy, managing director at Citigroup, on BRIC, the shorthand commonly used in equity derivatives for Brazil, Russia, India and China-linked plays (DW, 3/20).

 

"There is bags of scope."--Robert Reoch, founder of Reoch Credit, on the potential for third-tier banks to get into credit derivatives (DW, 4/3).

 

"It makes all the sense in the world."--Tim Hoffman, senior v.p. in capital markets at Saxon Mortgage in Richmond, Va., commenting on the merits of the ABX synthetic mortgage-backed securities index (DW, 4/24).

 

"The court had a fundamental misunderstanding of how CDS contracts work."--Lary Stromfeld, partner at Cadwalader, Wickersham & Taft in New York, on a U.S. court ruling which has threatened the legal stability of credit-default swap contracts (DW, 5/22).

 

"The markets are way too tight to be long only."--Karan Chadha, managing director at Washington Square Investment Management in London, on why the firm's long/short synthetic collateralized debt obligation has proved popular and prompted discussions of a second issue (DW, 6/5).

 

"We are dabbling our toes in it at the moment, but will be swimming when the market gets going."--Richard Omohundro, chairman of the investment committee at CypressTree Investment Management in London, on the firm considering using credit-default swaps on loans (DW, 6/26).

 

"The market has become more democratic."--Rajiv Kamilla, v.p. in structured products trading at Goldman Sachs, on the ability to express both positive and negative views on asset-backed securities via CDS (DW, 9/18).

 

"We got comfortable looking at the laws of probability."--Allan Smith, president and ceo of Saxon Financial in Toronto, discussing back testing it ran before issuing its first capital-protected note referencing one of its investment funds (DW, 10/2).

 

"In some ways, it played right into our hands."--Ravi Anand, head of structured products at New Star Asset Management in London, explaining how hedge fund Amaranth's collapse has highlighted the danger of investing directly in single funds and boosted the appeal of New Star's exchange-traded hedge-fund index investment (DW, 10/30).

 

"Volatility is crawling out of its death bed."--Jonathan Kinlay, ceo of Proteom Capital Management, on how a pickup in global volatility has prompted renewed interest in Proteum's variance swap hedge funds (DW, 6/19).

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