SG to launch tradeable CDS Index
France’s SG is planning to launch a tradeable credit derivative index, which has initially been dubbed Credindex. The product aims to make investing in credit derivatives simpler in order to appeal to segments of the market that are currently underinvested in the asset class. Yves Lehmann, London-based executive director of global solutions for financial institutions, says that the product is expected to be launched before the end of 2006.
The basic idea for the tradeable CDS index is relatively simple. “We will create a pool of assets that is invested in liquid money market securities while simultaneously selling protection in a basket of credit default swap (CDS) names.
Every six months we’ll rollover positions and recapitalise,” Lehmann says. Credindex will be modelled on the most liquid contracts at any given time, which would currently be the iTraxx in Europe and CDX in the US.
By launching a CDS index SG plans to broaden the
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