Taipei-based Taiwan Life Insurance, with over USD2.1 billion in assets, is considering investing in credit-linked notes for the first time in the coming months. "We're looking at this," said Amy Chen, financial products fund manager, noting that the insurer is considering CLNs linked to U.S. or Taiwanese companies for its USD400 million fixed-income portfolio.
"We need products that can meet our target yield," said Chen, noting that the company's internal target is 7% per annum. At the moment, Taiwan Life is primarily investing in long-dated callable notes, with maturities around 20 years. Chen continued that the firm had also looked at synthetic collateralized debt obligations (DW, 9/9) but noted that it would be difficult to get out of an equity tranche due to a lack of liquidity and that rated tranches do not provide an adequate return. "We'll steer away from CDOs for now," she added.
The typical investment will be around USD10 million per note, but Chen said it was too early to comment on the total size of its potential investment.
"We speak with a number of brokers daily," said Chen, singling out Credit Suisse First Boston, Merrill Lynch, Morgan Stanley and Salomon Smith Barney. Relationships and pricing will be taken into consideration when selecting counterparties.
