Japan PRDCs stage a comeback on yen depreciation
The PRDC market has been reborn after a five-year hiatus since the financial crisis. What is driving the market this time and have dealers devised a way to hedge some of the risk that proved so toxic in 2008?
When it comes to exotic risk in Japan the culinary delicacy fugu leaps to mind – the puffer fish treat must be carefully prepared by a skilled chef to remove toxic parts which are deadly to humans. Power reverse dual currency (PRDC) notes, a mainstay of the Japan structured products market between 2001 and 2008, were the banking equivalent of this piscine risk, causing multi-billion dollar losses at the height of the crisis. The product has now returned in large sizes but dealers say they have
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