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Derivatives

Deutsche Bank Plans iBoxx Products

Deutsche Bank is prepping its first products referenced to the iBoxx index, with two to three in the pipeline. iBoxx is a European fixed-income index jointly compiled by seven market makers to provide more transparent pricing of investment-grade corporate bonds. Jae Oh, managing director within integrated credit trading, said the intention of the new products is to give investors exposure to the widest representation of the corporate bond market. Oh and Michele Foresti, director within over-the-counter derivatives, are focusing their time on developing new products using OTC derivatives based on iBoxx.

The firm intends to link the products to the prices and weightings of the iBoxx index, but Oh would not elaborate on which OTC derivatives would be used to create the products. ABN AMRO recently launched a credit-linked note using the weightings of the index, called the iBoxx 50 Series-I Note (DW, 7/1). The underlying portfolio of the note, however, is static, meaning it will not follow the index over the long term.

Michele Faissola, managing director and global head of OTC derivatives, said the firm has made a strong commitment to this portion of the business and will be targeting asset managers, financial institutions and retail investors for the products. Faissola added that the firm is considering staffing up on the trading side of the group in the first quarter of next year. New hires are likely to be internal transfers.

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