Editor's letter

Look out for more volatility products, but also keep an eye on the credit markets as the expected themes for this year. As the end of last year approached there was still no good news for credit, with those concerned working over the Christmas break to make up for the time they lost to the credit chaos. Damaged credit products offer an opportunity to innovate, say the sages of the structured products world, when pointing out, quite reasonably, that crisis leads creative minds to be inventive.

There is more than a critical mass of large brains in the structured products sphere to offer the kind of creativity that will repair damaged products and provide new ones.

The most interesting idea that we have heard of so far is restructured credit products, whereby the original deal is tweaked and a new product – presumably a tasty equity play – attached, providing the latest stimulus to the hybrid market.

For countries and regions, the verdict from the bankers interviewed for the review and outlook article suggests that you should look almost everywhere. They like the rampant growth of the US market, and they cannot resist the temptation on offer from Asia, even though the region remains obsessed with the uncertain virtues of short-term products.

They also like Africa, which emerged as a play last year and is expected by most to form a prominent part of the structured products market this year. Recreating that casual but obvious fundamental dynamic, the African continent offers little supply (and liquidity), while at the same time being an epicentre for demand.

The usual country candidates are tipped to thrive – Germany and a re-emergent Italy. In fact, it is almost all good news.

The black spot is, and will continue to be, misselling. Again, the news section for this month is peppered with stories of woe and wrongdoing, with more of the same likely to feature in the next issue of the magazine. These stories keep on coming, which is good for us, but not for our readers.

Everyone here at Structured Products wishes you all the best of luck for the new year.

Richard Jory