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.<\/p>\n
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.<\/p>\n
“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.”<\/p>\n
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.<\/p>\n