Dutch Mail Group Mulls Credit Derivatives
TPG, the privately owned Dutch mail carrier with approximately EUR7.5 billion (USD6.6 billion) in assets, is examining using credit derivatives for the first time to hedge its counterparty credit risk. Lars Wickson, assistant treasurer in Amsterdam, said the company is keeping abreast of events in the credit derivatives market as a possible means to supplement other risk management techniques. The company already uses plain-vanilla derivatives, both listed and over-the-counter to offload interest-rate and foreign exchange risk. He said the company works with roughly 15 relationship banks and picks counterparties on the basis of price and credit rating. He declined to name the firms.
The potential use of credit derivatives "is something that is very much in its infancy stage," said Wickson, adding, "at this point it is not a top priority in risk management." Wickson declined further comment as to what types of credit derivatives the company would use and for what specific purposes.
TPG was spun off from Royal KPN in 1998. The Dutch government owns nearly 35% of TPG.