A fruitful time for hybrids
Structurers are coming up with novel ways of tapping investor demand for credit-linked products without the default risk associated with the previous generation of structured products. Their answer? Hybrids. Regis Benichou and Arnaud Scemama of Calyon describe some of the products on offer to investors
Since last year, the financial economy has faced one of the worst crises since the 1929 Great Depression. It started with the US housing slump and the now famous subprime slump, and subsequently spread to the whole credit market. In this turmoil, credit spreads have hit historical high levels (see chart 1, over). For many investors the crisis has provided an opportunity to be compensated for the risks they were naturally exposed to.
Of course, in the first phase of the turmoil, as the crisis was
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