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Derivatives

CDC Pitches Novel Hedge Fund Note In Japan

CDC IXIS Capital Markets is pitching to Japanese institutional and high-net-worth investors a novel note--linked to an index of hedge funds--that combines principal-protection and leverage.

CDC IXIS Capital Markets is pitching to Japanese institutional and high-net-worth investors a novel note--linked to an index of hedge funds--that combines principal-protection and leverage. Fabien Labouret, Asian head of structured alternative investments in Tokyo, said this is likely the first time these features have been combined in the Japanese structured note market.

The private deal will feature two times leverage and a return likely ranging between 15-25%, Labouret explained. CDC expects the deal to attract at least USD50 million in commitments, he added, declining the name the global hedge fund index on which the performance will be based.

Although most Japanese investors are wary of hedge funds, providing a capital guarantee is a strong incentive for end users to take the plunge. In addition, the low interest rate environment in the U.S. allows investors to get cheap leverage in this structure, he continued.

The move follows CDC's recent efforts in structuring collateralized fund obligations in Japan (DW, 1/18).

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