Enhancing yields
Kazue Takagaki and Reiko Tokukatsu of Deutsche Securities in Tokyo examine the evolution of structured credit products in Japan, and the resulting risk management challenges
Today’s global markets are a challenging environment for yield-driven investors. This is particularly the case in Japan – at the time of writing, the benchmark 30-year Japanese government bond yield had fallen below 1%, and domestic credit spreads are at multi-year tights. Having said this, it is not prudent to stretch for returns without examining the risks involved. For investors prepared to take credit risk, synthetic structured products, such as synthetic collateralised debt
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