Autocall concentration weighs on dealers
Hedging headaches force issuers to seek new structured product blockbusters
Like rich food and fine wine, in the world of structured products it is possible to have too much of a good thing. The cause of indigestion among dealers today is the autocallable bond. The high-yielding debt and equity hybrid was once a peripheral retail product, but now represents 80% of equity-related structured note issuance in Europe and Asia.
A torrid fourth quarter across global equity markets left Natixis with a €260 million hit on its Korean autocall book. Other major issuers of the
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Markets
FX defs look to calculation agents for close-out rates
New Isda rule book also set to streamline ‘impossibility’ standard for disruption events
Autocall curbs hit long-dated Nikkei and HSCEI options
Collapsing Asia structured products inventory saps market-makers of long-dated vol supply
Markets worry EU’s reporting simplification will add to burden
Rather than reducing firms’ obligations, market participants fear it could end up increasing requirements
Corporates turn to structured notes to juice cash returns
Dual currency notes find favour with treasurers under pressure to boost yields amid higher rates
CDS panel revamp wins support, but questions linger
Role of independent members, transparency and funding of enhanced committee yet to be decided
XTX Markets hires Brook for Emea market-making
Sam Brook previously worked on buildout of NatWest’s e-FX liquidity desk
Corporates pressed on FX hedges as dollar surge bites
CFOs increasingly facing tough questions about impact of exchange rates on foreign revenues
Tariff news ‘ping pong’ gives FX options desks a headache
Dealers say Trump’s shifting deadlines sparked weekend trading rush and made it hard to monetise flows
