Poste Italiane, the Italian postal service, plans to add yield to its investment portfolio next year by entering fresh agreements to sell credit protection when its current credit derivatives positions expire. The company first entered the credit derivatives market early this year by selling protection on bank names with a maximum contract length of 18 months to obtain extra yield, said Massimo Catasta, financial director in Rome.
The total notional size of the current trades is approximately EUR15 million (USD14.79 million) and the company manages an investment portfolio of EUR300 million. Catasta said the company typically invests in high-grade bonds, rated AA to AAA, and uses credit derivatives to enhance yield. He said he would look to sell protection on bank names in approximately the same notional size next year.
