Reuters – The credit derivatives market is set to continue its blistering rate of growth in 2006, bankers and investors say, but regulators will keep a sharp eye on its progress.
The benign investment environment of the past three years has stoked demand for products that add risk, but the coming 12 months could see the emergence of technologies designed for a weaker backdrop, according to investors.
“Fund managers will want flexible product structures to generate absolute returns,” said Alex Khein, chief operating office at Bluebay Asset Management. “The focus will be on products geared to a volatile market.”
Credit derivatives are among the fastest-growing asset classes in the world, expanding 48 percent in the first six months of this year to $12.4 trillion, according to the International Swaps & Derivatives Association, a year-on-year jump of 128 percent.
