Investor demand for Asian hybrid products growing

Credit-linked notes with embedded corridor or ratchet notes – the former where the investor receives a enhanced yield if the underlying rate stays within a pre-determined range, and the latter where the gains of the underlying rate are capped in return for a higher yield – are starting to see buying interest from private banking clients and high-net-worth individuals across Asia.

This demand has emerged particularly over the last month, and is likely to remain until the end of the year, Kwan said. “We do see more and more acceptance of the idea, mainly due to the fact that there are not a lot of alternatives out there.”

Future developments could include a basket of credits, with embedded interest rate or forex options, Kwan added.