HSBC and Cairn Financial Products announce the closing of `MINTS`
Story date: 2007.9.01
HSBC and Cairn Financial Products Limited (“Cairn”) are pleased to announce a series of closings in MINTs, a principal-protected managed long/short credit CPPI transaction. The strategy invests in tranches of the iTraxx® Europe and Dow Jones CDX.NA.IG investment grade credit indices. Notes have been issued in USD and EUR with maturities of 7 and 8 years. The notes pay a contingent coupon of Libor +150 and Euribor +150, respectively, with a higher overall target return.
Strategy
The core strategy of MINTs consists of long and short positions in different tranches of the iTraxx® Europe and Dow Jones CDX.NA.IG investment grade credit indices. The aggregate of long and short positions is broadly credit market neutral, while having the benefit of substantial positive carry. This positive carry, which can be generated under current market conditions, results in an attractive risk / return to investors. In addition to the core index tranche strategy, Cairn utilises its experience to provide on-going surveillance and risk management of individual names in the credit indices using its established technology platform for fundamental credit analysis.
Structural enhancements
MINTs combines Cairn’s established expertise in managing a long/short index tranche strategy with a number of structural enhancements. Firstly, MINTs allows Cairn to deal in both the iTraxx® Europe and the Dow Jones CDX.NA.IG credit indices and to manage the ratio of individual tranches and of the iTraxx® and CDX indices on a dynamic basis. Secondly, the amount of leverage that HSBC allows within the strategy is flexible and managed dynamically by Cairn based on market conditions.
The initial closings have totalled in excess of USD 150 million with additional taps expected over the coming weeks.
Jeff Jakubiak, Head of Structured Credit Products EMEA for HSBC noted: “With investor concern over the current credit spread environment, MINTs offered investors an attractive return profile without the outright long exposure found in most structured credit products. This coupled with Cairn’s experience as a top manager in structured credit products resulted in significant investor demand in Asia and Europe.”
Vanaja Indra of Cairn Capital commented: “Working together with HSBC on the MINTs transaction has allowed Cairn Financial Products to significantly widen its investor base through HSBC’s global distribution network. The success was especially notable in Asia, where HSBC’s strong distribution and Cairn’s management expertise allowed us to deliver the next generation of this attractive long/short strategy.”
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Media enquiries to: Charles Clarke on 020 7991 3878 (mobile 07767 003670)or Malcolm Wallis on 020 7991 3876 (mobile 07774 556416)
NOTES TO EDITORS:
About Cairn Financial Products Limited
Cairn Financial Products Limited is a subsidiary of Cairn Capital Limited and is able to deliver services in either a specific area of the credit market or across the entire spectrum to clients and investors who either approach Cairn directly or are referred by the major investment banks. The services Cairn provides include asset management, fund products and structuring and advisory. Cairn Financial Products Limited is authorised and regulated by the Financial Services Authority.
About HSBC:
The HSBC Group serves over 125 million customers worldwide. It has around 9,500 offices in 76 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.
HSBC Corporate, Investment Banking and Markets (CIBM) provides tailored financial products and services to major government, corporate and institutional clients. Within client-focused business lines, Global Banking, Global Markets and Global Transaction Banking, CIBM offers a full range of capabilities, including foreign exchange, fixed income, derivatives, risk advisory, equity and debt capital markets, corporate and investment banking, payments and cash management, trade services, and securities services. For more information on CIBM, please visit http://www.hsbcnet.com/.
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