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Derivatives

Royal London Takes Credit Derivatives Plunge

Royal London Asset Management has entered the credit derivatives market with the launch of a credit-default swap trading mandate.

Royal London Asset Management has entered the credit derivatives market with the launch of a credit-default swap trading mandate. The manager, which has more than GBP24 billion (USD43 billion) in assets under management, began trading credit-default swaps on the new sterling iTraxx credit index last month as an extension of its life funds. In addition, it has invested in SDI-75 Funding, a 10-year fixed-rate note referencing the new sterling index.

RLAM first considered adopting credit derivatives in the Spring (DW, 8/26), but the introduction of the sterling iTraxx in December kick-started trading. Stephen Booth, fund manager, said the manager has executed both long and short trades on the index with notionals of around GBP5million. He declined to name counterparties, but noted the manager is also considering using single-name CDS.

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