In Singapore, Swiss investment house Vontobel and finews.asia put on an exclusive event for fixed-income investors titled «Capturing Yield in 2023».
Fixed-income markets are on the minds of investors right now. Interest rates are at the highest they have been in more than a decade and credit spreads widening. Needless to say, opportunities abound. Against this backdrop, a luncheon jointly organized by Vontobel and finews.asia recently took place at the Capitol Kempinski Hotel Singapore.
Attendants were taken through the best yield opportunities in 2023 while also exploring the solutions derived from new structured products, including Vontobel’s latest innovation: Credit-Linked Notes (CLNs) that offer high yields together with daily liquidity and a $100k minimum launch size.
Some Impressions of the Event
The Speakers
- Markus Pfister, Head of Structured Solutions & Treasury and a Member of the Global Executive Board at Vontobel
- Claude Baumann, Founder and Publisher of finews.asia
- Georg von Wattenwyl, Global Head of Structured Solutions Financial Institution at Vontobel, and Chairman of SwissCham Singapore
- Sebastien Morreton, Vontobel's Head of Sales in Asia
Vontobel provides service and advice based on in-depth worldwide investment expertise to private clients, institutional investors, and financial market intermediaries in the domestic Swiss market and key international markets.
The Swiss firm leverages technology to deliver high-quality, tailored client solutions. By positioning itself purely as a buy-side investment company, Vontobel operates exclusively on the side of investment clients.
Top Five Issuers
In Asia, Vontobel works with close to 100 External Asset Managers (EAMs) and with 30 large banks and brokers. The firm is connected to five flow product platforms worldwide and is ranked as one of the top five issuers on all of these platforms.
With rising interest rates, Vontobel has a vast selection of CLNs on offer (as indicated above, CLNs are fixed-income structured products that allow investors to gain exposure to the credit risk of reference entities (i.e. bond issuers).
Periodic Coupons
They are structured with a short Credit Default Swap (CDS) position on the reference entity and combined with the bond yield of the issuer (Vontobel). Higher yields can potentially be achieved by investing CLNs versus direct bond investments.
The product gives periodic coupon payments and full redemption of the invested amount at maturity, provided that no credit event occurs (as defined by ISDA). If a credit event occurs, the CLN will be redeemed prematurely and the client receives a Liquidation Amount that corresponds to the market value of the reference bond.
Key Features
- CLNs can be customized for the investor. There is flexibility in the tenor, currency, seniority, and coupon frequency can be tailored to the investor’s preference.
- The minimum launch size starts as low as US$ 10,000
- CLNs allow an investment in desired entities, if bonds of this issuer are unavailable on the cash market or if liquidity is scarce.
- CLNs can allow for investment in a foreign entity (e.g. Investor can gain exposure on a US issuer through a CLN denominated in SGD)