Meeting demand

Dealers say bringing corporate end-users into the credit derivatives market hasbeen a priority for years. Covetously eyeing large pools of credit risk embeddedin receivables, vendor finance contracts and supplier contracts, dealers havemade a number of attempts to unlock this attractive source of risk and bringit into the market. But they have not succeeded. There are reasonable explanations – thecontracts are too bespoke, the risks too concentrated, the corporates too indifferent.But as Sarfraz Thind reports ( seearticle ), perhaps the dealers just aren’tgiving the people what they want.

Some large corporates have found credit-linked notes to be extremely useful.But dealers’ emphasis on boosting liquidity by streamlining and commoditisingcredit derivatives contract terms as much as possible often frustrates corporates,with their specific needs. Indeed, they complain that dealers just aren’tlistening.

BMW has operations scattered throughout the world, leading to complex