Credit Suisse seeks larger share of debt swaps market

Bloomberg

Credit Suisse Group AG is seeking to grow its market share for a type of derivative that’s gaining favour among investors as a way to wager on corporate debt.
The Swiss bank is ramping up its market-making operations for so-called total-return swaps tied to US bond and loan indexes, according to people familiar with the matter. The lender hired Guillaume Sivadier from JPMorgan Chase & Co. earlier this year to oversee the effort, said the people, who asked not to be identified because they’re not authorised to speak about it.
The initiative is intended to round out the firm’s credit derivatives business and capitalise on demand for products that dealers and investors say is growing. The total-return swaps appeal to investors because they’re designed to make it easier to bet on debt as trading in the credit markets becomes increasingly time consuming and expensive with liquidity drying up.
“We are pleased to leverage our market-leading position in CDX indexes and options to further expand our cash derivatives product offering, where we have seen an increase in client demand,” said Credit Suisse spokeswoman Candice Sun.
New York-based Sivadier trades total-return swaps tied to IHS Markit Ltd.’s iBoxx bond and loan indexes and reports to David Goldenberg and Joel Kent, the bank’s co-heads of US credit derivatives, the people said. He is one of a number of recent hires including credit derivatives salesman Daniel Molinares. Total-return swaps amplify gains or losses because they allow investors to wager on a large pool of debt while setting aside a relatively smaller amount of collateral to back the trade. They also let buyers get returns tied to assets without having to own them.