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Derivatives

AXA Considers CDO Shopping Spree

AXA Life Insurance (Japan), which has over JPY382 trillion (USD3.26 billion) in assets, is considering snapping up more synthetic collateralized debt obligations next year. The present investment strategy ends in June and because of the tightness of Japanese credit spreads it will likely allocate more capital to CDOs and fund of funds, said Toshiyuki Murakami, manager in the structured asset investment department in Tokyo.

The department holds tranches in more than 10 synthetic CDOs, purchasing either mezzanine or equity risk, along with investments in fund of hedge funds, noted Murakami.

AXA invests in CDOs referenced to U.S. and European debt because they offer more attractive yields than domestic CDOs.

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