Increased volatility could help structure attractive returns

Widening bond spreads and market volatility will result in more interesting structured products, according to Morgan Stanley. The spikes in volatility that followed news of a hung parliament in the UK and the disagreements over a bail-out package for Greece could help issuers construct more attractive rates and income products.

“At the moment, it feels very much like the beginning of 2009,” said Marc Chamberlain, executive director at Morgan Stanley in London, speaking on the day of the UK election results.

“With bond spreads widening and volatility ticking up, certain types of income products could look attractive again,” said Chamberlain.

But Chamberlain warns that getting deals done could prove difficult because of the speed and unpredictability of market movements. He says there is a possibility that the FTSE 100