Evidence from the EMTN market
The bug hunters cash in
"We're not quite back to the heyday of 1993 but the structured asset market is definitely back in a big way." The period this global head of derivatives is fondly recalling was characterized by highly leveraged bets on falling interest rates that culminated in the debacles at Procter & Gamble, Orange County, and elsewhere. Today the bets are less leveraged but they express views on ever more exotic currencies and assets using an ever more complex combination of non-vanilla products. This increasing fondness for the exotic has already taken its toll this time not only on the buyers of the products but also their suppliers.
Range trades in the foreign exchange markets and recently, to a lesser extent, interest rate markets have been one of the most popular products in the last 18 months. In the most straightforward version, the...
