Best Structured Product Provider – Hybrids
Once the solution becomes popular, we put a lot of focus on the service level — including response time and continuous market updates — to optimise client experiences. Client-centricity was also key as clients were often looking for more bespoke solutions, such as having a fixed coupon the first year without any condition on CMS spread. Clients responded positively to our ability to revert with tailor-made solutions in a short amount of time.
We are now leveraging the success of this solution by generating hybrid ideas bespoke to our private banks across the whole asset classes spectrum to benefit from fast-changing market conditions.
“Over the past few years, we have been educating our clients on the potential to boost their coupon by taking a view on other asset classes,” said Shaun Mallal, cross-asset solutions sales, WM&FO, global markets APAC at BNP Paribas. “Those efforts started to bear fruit in 2018 as tightening credit spreads made the yield on pure credit-linked notes (CLNs) no longer sufficient to meet investors’ expectations.”
With rate hikes by the Federal Reserve flattening the yield curve, BNP Paribas quickly capitalised on a hybrid opportunity by being a first mover to spot an attractive yield pick-up on CLNs with range-accrual conditions on the 30-year and two-year USD constant maturity swap (CMS) spread.
“This initiative was greatly facilitated by our cross-asset setup across trading, structuring, and sales, as well as leveraging ideas from our global platform. The cross-asset setup of the team dedicated to private banks improved information flows within the team and made us more relevant for our clients,” Mallal added.
“We are now leveraging the success of this solution by generating hybrid ideas bespoke to our private banks across the whole asset classes spectrum to benefit from fast-changing market conditions.”
BNP Paribas’ efforts in continuous investor education on hybrid structured products laid the foundation for realising gains in 2018, most notably through a yield-enhancement solution designed to capture opportunities from a moving US yield curve — a theme that will remain relevant for global investors in the foreseeable future.
In turn, Asia’s private banks crowned BNP Paribas the go-to provider of hybrid solutions, bestowing upon it the title of Best Structured Product Provider – Hybrids in 2018.