Derivative officials in India expect an onshore credit derivatives market to get the go ahead later this year. "This will happen within the next six months," said Srinivasan Varadarajan, treasurer at JPMorgan in Mumbai, adding that the products should be available after the upcoming launch of interest rate (DW, 6/30) and foreign exchange options (DW 4/28/02) in the coming weeks.
The Reserve Bank of India will likely open the market by permitting firms to both buy and sell credit protection as well structure credit-linked notes, according to a senior banker involved in drafting the guidelines. All instruments would likely be restricted onshore to domestic credits denominated in rupees. "The emphasis will probably be on the distribution of credit risk among banks," he added. Alpana Killawala, general manager at the Reserve Bank of India in Mumbai, did not return calls.
"We'll definitely take a look," said Ashish Barthasarthy, head of trading at HDFC Bank in Mumbai, noting that there are several issues, such as legal and documentation questions, that would have to be answered before the bank would consider the product. He added, "There will probably be a few one-off deals initially. I don't see this taking off right at the start."
