Credit derivatives professionals are seeing initial interest for options and tranches linked to the recently launched credit sub-indexes in Asia and expect the first deals to hit within the coming weeks. "Funds are looking at this as a way to hedge bond positions, banking loans or CDOs," said an official at JPMorgan.
The new sub-indices created on the back of the merger of rival credit indices TRAC-X and iBoxx include the Korea, Greater China and Rest of Asia products. "I don't think this will be huge, but we should start seeing some trades," said a credit trader, noting that first-to-default baskets on the sub-indexes have also been structured in recent weeks.
