Hartford Investment Management, a Hartford, Conn.-based money manager with USD171 billion in assets, is in discussions with major investment firms about using credit derivatives for the first time. Bill Meaney, portfolio manager, said it would buy and sell credit-default swaps to hedge its credit portfolio and to take positions. The firm is planning to pull the trigger on its first trade by the second quarter. Meaney said HIMCO recently started examining entering the credit derivatives market after recognizing the dramatic growth in volume.
HIMCO has been talking to structured products professionals at Lehman Brothers, Merrill Lynch, Deutsche Bank and Goldman Sachs. "We're in discussions with all the major players," Meaney said.
HIMCO plans to both buy and sell protection on single name investment-grade credits. Meaney said entering the market would allow HIMCO to complement its equity strategy by diversifying its exposure on stock names it has had difficulty accessing through the cash market and also provide a solid tracking system for gauging flows in the corporate markets. "The credit-default swap markets is often a leading indicator of what's going on in the cash market," he said.
Officials at Merrill, Goldman and Lehman did not return calls and an official at Deutsche Bank confirmed it was talking to the fund manager.
