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Hong Kong-Based Bank Plans Hybrid Note Launch

Hong Kong's Dao Heng Bank, which was acquired last year by the Development Bank of Singapore, is looking to market hybrid notes for the first time. "We're going to test the market," said Henry Chan, v.p. in marketing and product development in Hong Kong. He said that given the prevailing low interest rate environment, clients are looking for yield-enhancing products.

Dao Heng will look to start marketing the notes within two months. The instruments will likely incorporate a combination of foreign exchange and interest rate risk, via options, and credit risk with the use of credit-default swaps. Chan said that the centralized structuring team at DBS in Singapore would create the products for Dao Heng to distribute.

A number of firms in Hong Kong, including Barclays Capital Asia, ING Financial Markets and Société Générale Asia started marketing hybrid notes this year (DW, 4/14).

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