Yield hunger drives structured credit

The end of the insurer as investor?
Spreading the load of distribution
From direction to correlation
GMAM looks for more efficient risk exposure

A NEW KIND of investment tip is circulating in the City. "If you want to make money, buy a first-to-default note on a bank" was the advice overheard in a London restaurant last month. Where once investors were sold on the easy-to-understand virtues of cheap bonds or undervalued equity, these days it seems that conspiratorial figures hunched in urgent conversation over their lunch plates are just as likely to be discussing the latest collateralized swap obligation, first-to-default basket, or credit option.

Some of the smartest players in the financial markets – and perhaps many of the not so smart – are piling into structured credit. "We've seen new buyers coming into the market," says Marc Pantic, financial engineer in the structured credit team at SG CIB in London. "Structured...