Editor's letter


With Delphi's bankruptcy, a new Fed chairman and another restructuring plan from GM, it's not as if credit investors don't have enough to keep track of. But just to add to the day job, there's a whole host of new products on offer for responsible portfolio managers to keep abreast of. This month we've done the hard work for you: the issue is a veritable smorgasbord of new opportunities for your delectation.

Take the latest generation of collateralised debt obligations (CDOs) to hit the shelves this season: leveraged super-senior CDOs are the market's current hot product, born out of the sudden demise of mezzanine CDOs after the correlation repricing in May. The advantage is higher yields and default rates "unprecedented in the history of the credit markets", trumpets Nicolas Christen, senior structurer at BNP Paribas, in our feature starting on p. 48. The downside, warns our In the City column (p. 19) is that as these structures are often supplied by unrated hedge funds that could disappear when the going gets tough, they are akin to buying disaster insurance that disappears the moment the hurricane hits.

As well as new products, new markets are also becoming increasingly accessible to credit investors. In our cover story this month, we highlight one rapidly growing area that conventional investors should start paying attention to. As the soaring cost of oil sucks a surplus of dollars into the Middle East, Islamic finance is currently enjoying a boom period. With the market's growing sophistication – the first ever Islamic convertible bond is expected out of Malaysia any time now – and non-Islamic countries such as Germany getting in on the action, Hardeep Dhillon explains everything you need to know about Islamic bonds, starting on p. 42.

I hope you enjoy the issue.

Nikki Marmery, Editor

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