Editor's Letter

It's not often that credit risk and derivatives top the agenda at the World Economic Forum, but this year they've taken star billing. Central bankers and regulators have been weighing into the debate in Davos, after European Central Bank president Jean-Claude Trichet voiced his concern that complex financial products are distorting perception of credit risk.

It's a debate we've seen before: the 'weapons of mass destruction' versus 'useful tools for dissipating risk' view of derivatives. But with spreads on credit derivatives indices at record tights, is the market overly confident that its newest - and as yet untested - toys will absorb the shock of a major financial crisis? We're polling structured credit experts now to bring you the results in our next issue.

Meanwhile a major financial crisis might be the very thing that makes some investment banks regret having slashed resources in credit research. On the bright side, the buy side is staffing up. To highlight this shift in credit expertise, we profile 14 top analysts who have made the move from sell- to buy-side research over the past few years.

Nikki Marmery, Editor.