Against a backdrop of the impending US Federal Reserve interest rates hike and Asian investor preference for equity and FX derivatives, J.P. Morgan has shown true innovation and resilience in the credit-linked structured products space.
“We distinguish ourselves by constantly coming up with innovative solutions that leverage on the firm’s strength. We provide various access, leverage, and portfolio solutions using credit derivatives,” said Serene Chan, head of fixed income, Asia at J.P. Morgan.
As J.P. Morgan is one of the highest rated issuers in the market, she added, its funding level is naturally low, which results in lower coupons for the same structure. This can create challenges in generating competitive pricing.
J.P. Morgan, however, was able to create and capture unique opportunities, particularly in spotting value dislocation in the credit market, Chan continued.
“Where it is a dislocation between bonds and CDS, a dislocation between different currencies of the same credit, or an onshore-offshore arbitrage, we were able to capture some of these value opportunities by putting collaterals into SPV structures to further enhance the yield for clients,” Chan said, detailing the various innovative solutions that J.P. Morgan was able to piece together.
Such solutions were particularly popular during the market volatility that plagued the second half of 2015.
“In volatile markets the value dislocation are more pronounced. We were able to capture the selloff in the credit market for good carry trade opportunities, and at the same time provide hedging strategies that limits the downside risk for clients,” said Chan.
In addition to dislocation opportunities, J.P. Morgan launched thematic hybrid products that allowed clients to take a view on multiple asset classes such as credit, interest rates or FX. While complex at first, clients in Asia grew comfortable with the concepts through J.P. Morgan educational processes.
For all the aforementioned reasons, J.P. Morgan is this year’s winner of our Best Provider of Credit-linked Structured Products award.