Credit too hot to handle

Some distributors in Asia are offering first-to-default retail credit notes that give sovereign exposure, signalling a revival of interest in credit. But heavy mark-to-market losses and the use of CDOs as underlying collateral in previous issues have left an indelible stain on the already damaged reputation of credit-linked notes. Matt Cameron reports

Prior to the collapse of global credit markets in 2007, credit-linked structured products represented only a modest slice of the average Asian retail investor's portfolio, with the bulk of products confined to Singapore and Hong Kong. In the aftermath of the crisis, credit-linked products are struggling to attract retail investors' attention, and sales are almost non-existent in some markets, such as Malaysia.

However, some issuers and distributors are offering first-to-default (FTD) notes to