Bank of Tokyo-Mitsubishi is looking to boost its activity in the Japanese credit derivatives market. Nobukazu Saeki, manager in the derivatives and structured products division in Tokyo, said widening spreads has increased demand for structured products, such as credit-linked notes, synthetic collateralized debt obligations and hybrid notes. The government has also removed its guarantee on short-term deposit accounts in recent months, prompting investors to seek alternative investments that offer higher yield. Saeki predicted that BoTM will see two or three times more demand for credit products this year compared to last because of these factors.
As part of its recent push into credit products, Saeki said the firm is also planning to structure synthetic collateralized debt obligations as well as hybrid notes within the next six to 12 months. BoTM has considered offering synthetic CDOs before (DW, 12/16) but believes that such a structure is now attractive to investors due to widening spreads on Japanese credits.
