Fixed income looks set to be increasingly not-so-fixed.
BNP Paribas SA, Citigroup Inc., Credit Suisse Group AG and JPMorgan Chase & Co. are teaming up to create a centralized platform that allows investors to change some features of bonds into almost anything they like.
The service, launching early next year, will offer repackaged notes known as repacks that will be issued through a special purpose vehicle, according to interviews with the banks involved. The structured securities allow buyers to alter parts of the profiles of underlying bonds, such as turn coupon payments into floating from fixed or switch returns into other currencies.
Low interest rates and tight credit spreads have boosted demand for tailored debt offerings as investors seek more innovative ways of chasing yield. Most buyers currently have to approach banks for pricing and review lengthy legal documents individually. Stricter global banking regulations means it’s more beneficial to standardise simpler products and trade them via a single entity from one location, according to Credit Suisse Group AG.
“Structured product issuance has become more onerous for banks as a result of their balance sheet and funding constraints and as such less attractive to investors,” said Paul Bajer, director in global credit products at Credit Suisse in London. “Regulations, both local and global, have also impacted investors, for example, requiring them to demonstrate best execution. This is easier to achieve when all banks quote on the same terms via a single platform.”
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BNP Paribas SA, Citigroup Inc., Credit Suisse Group AG and JPMorgan Chase & Co. are teaming up to create a centralized platform that allows investors to change some features of bonds into almost anything they like.
The service, launching early next year, will offer repackaged notes known as repacks that will be issued through a special purpose vehicle, according to interviews with the banks involved. The structured securities allow buyers to alter parts of the profiles of underlying bonds, such as turn coupon payments into floating from fixed or switch returns into other currencies.
Low interest rates and tight credit spreads have boosted demand for tailored debt offerings as investors seek more innovative ways of chasing yield. Most buyers currently have to approach banks for pricing and review lengthy legal documents individually. Stricter global banking regulations means it’s more beneficial to standardise simpler products and trade them via a single entity from one location, according to Credit Suisse Group AG.
“Structured product issuance has become more onerous for banks as a result of their balance sheet and funding constraints and as such less attractive to investors,” said Paul Bajer, director in global credit products at Credit Suisse in London. “Regulations, both local and global, have also impacted investors, for example, requiring them to demonstrate best execution. This is easier to achieve when all banks quote on the same terms via a single platform.”
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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