Wellington-based asset manager BNZ Investment Management is considering using credit derivatives for the first time for its NZD120 million (USD58 million) domestic fixed-income portfolio. "We've been looking at this for some time," said Stephen Hong, manager of portfolio research and fixed-income. BNZ is looking at the possibility of investing in credit-linked notes as well as selling credit-default protection on domestic names as ways to increase yield on its portfolio. It will also consider investing in tranches of synthetic collateralized debt obligations, said Hong.
BNZ has been looking at using credit derivatives since last year (DW, 9/16) but is now looking to finalize the documentation. "We have a wee bit of a way to go," said Hong, adding that while it may take a few months to get the operation in order, it will definitely enter the credit market before year-end.
The fund is speaking with a number of counterparties to gain a further understanding of credit derivatives, including ANZ, Deutsche Bank and Westpac.
