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Derivatives

Aussie Fund Eyes Credit-Default Swap Debut

AMP Henderson Global Investors, one of Australia's largest asset managers with over AUD66 billion (USD35 billion) under management in Sydney, is considering trading credit-default swaps in Australia for the first time for its AUD25 billion fixed-income portfolio. "We're turning our energies toward credit-default swaps," said Mark Beardow, manager of credit. He added that the fund could invest in credit-default swaps within six months. AMP will consider buying as well as selling protection: "I'm open minded, we'll consider all options and applications," said Beardow.

The fund has been considering using credit derivatives products for over a year and invested in two tranches of synthetic collateralized debt obligations last year. However, AMP's leap into the credit-default swap market slowed in 2001 due to absorbing a AUD650 million credit portfolio from National Australia Asset Management, which tied up the management team. Additionally, credit-default swaps were not in the fund's initial investment mandates and investment agreements so AMP had to consult with investors about using credit derivatives.

"I'm pretty confident we'll have internal approval which will then allow us to begin establishing systems," explained Beardow.

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