According to Lam, 2003 “should be a good year, building on last year’s developments”. The growth of managed arbitrage CDOs is likely to continue, with a number of asset managers looking at following the steps of UOB Asset Management, which closed two transactions last year, she added.
Singapore institutions could also look at synthetic residential mortgage-backed securities (RMBS) as a way to transfer risk and to manage their mortgage portfolios more efficiently. Lam noted that “synthetic RMBS would be a good fit for Singapore”.
Synthetic collateralised loan obligations could also be popular among Singapore banks seeking free-up capital to expand geographically or to develop new businesses, Lam said.