In a year of significantly reduced appetite in Asia, due in large part to event-driven uncertainty and market gyrations, interest rate-linked investments were among those rare areas where clients showed greater confidence in taking directional bets. Constant maturity swaps (CMS) on the 10-year US Treasury were, resoundingly, the most popular trade in the region.
As a result, a handful of investment banks have thrown their hats (and balance sheet risk) into the rate-linked ring. But as much as new challengers would like to rapidly obtain market share from incumbents, any seasoned private banker will tell you that long-term consistency and commitment are the keys to success in the structured products business. This is especially true in the trade-oriented market of Asia, where intensive aftersales is critical to building a positive client experience.
When it comes to interest rate-linked structured products, Goldman Sachs is an industry mainstay – a committed cornerstone that has been around long enough to observe the dawn and demise of competitors. In addition to its longstanding tenure, the American investment bank sought to outdo an expanded pool of competitors by taking risks on esoteric opportunities.
According to the bank’s head of private investor product group for Asia Pacific ex-Japan, Isaac Wong, Goldman Sachs was able to widen the gap with rivals through its trading desk’s ability to take relatively illiquid and bespoke risks via cross-currency structures.
“One of our major differentiators is our ability to identify dislocations in the market and package those themes into investable ideas,” Wong says, highlighting the demand for shorter-dated (six months to one year) non-principal protected structured notes as a major regional development.
“Going forward, with interest rates potentially returning to normalised levels and with more volatility around policy actions, interest rate-linked structures might be even more interesting to investors.”
Goldman Sachs’ longstanding commitment to the business and restless efforts to differentiate by maintaining a broad offering has enabled it to win the title of Best Provider of Interest Rate-linked Structured Products.