2018 Winners
Best Structured Product Provider – Credit
GOLDMAN SACHS
Isaac Wong
head of the Private Investor Product Group for Asia Pacific ex-Japan, Goldman Sachs
As credit spreads remain at relatively low levels this year, private clients have continued to seek yield enhancement via structured notes. One popular product that we have developed in collaboration with our major private banking counterparts is a credit-linked range accrual note with coupons linked to the shape of the USD yield curve. By taking advantage of the historical flatness of the USD yield curve, together with mostly sovereign or quasi-sovereign credit risk which investors are comfortable with, the notes produce relatively high coupon compared to other fixed income instruments.
Looking ahead to 2019 and beyond, we will continue to embrace our barbell strategy of focusing on product innovation and tailor-made solutions, and at the same time make further investments into our digital strategy to make flows more efficient.
In collaboration with major private banking counterparts, the bank developed a credit-linked range accrual note with coupons linked to the shape of the USD yield curve, indicated by the spread between USD 30-year and two-year swap rates.
“The theme of yield curve non-inversion is a theme that Asian private investors are familiar with and have previously invested in. Over the last 20 years, the USD swap curve was mostly upward sloping and investors are comfortable with taking coupon risk on the shape of the yield curve,” said Isaac Wong, head of PIPG for Asia Pacific ex-Japan at Goldman Sachs.
“By taking advantage of the historical flatness of the USD yield curve, together with mostly sovereign or quasi-sovereign credit risk which investors are comfortable with, the notes produce relatively high coupon compared to other fixed income instruments. Most of these structures pay a floating-rate coupon plus spread and are also less interest rate sensitive in a rising rate environment,” he said.
Year-to-date, the bank has seen significant inflows into the product type through private banking distribution channels, including a significant 40%-plus growth in the credit space.
Meanwhile, the bank is also looking to better serve its wealth management clients by focusing its efforts on digital transformation and product innovation.
An integrated business which specialises in offering cross-asset structured products to third-party distributors and wealth managers, Goldman Sachs’ PIPG has dominated the credit-linked structured products space. As such, the bank has rightfully earned the title of this year’s Best Structured Product Provider – Credit.
