Credit Suisse First Boston is looking to beef up its presence as a structurer of high-yield credit derivatives. Joe Russell, global head of leveraged finance trading, says the firm will look to add two senior traders and possibly a structurer, though it has yet to be determined whether CSFB will move people internally or hire from outside. Russell says credit derivatives, traditionally associated with investment-grade credits, have increasingly begun to trade on high-yield and bank loan desks. Russell attributes the increased popularity to the increasingly volatile credit environment of the last 12-18 months. He would not disclose specific clients who have demanded credit derivatives, though he says the product is particularly popular with hedge funds.
Credit derivatives allow investors to put ordinary bonds at par, providing some investors added protection, notesBennett Goodman, CSFB's global head of leveraged finance. Other investors, he says, are happy to sell the right put option to pick up additional basis points of yield.