Financial Institutions and corporations globally are becoming increasingly aware of the need to actively manage credit risk. Investors recognize portfolio diversification, liquidity and appropriate risk adjusted returns as key components to successful credit investment that form the basic objectives of credit risk management. There is also a growing awareness of credit risk and its management is developing in the Japanese domestic market.
Shinsei Bank provides tailored credit risk management and investment solutions to customers. Our established record in Japanese credit markets, strong balance sheet, extensive corporate and financial institution client base, and expertise in cutting-edge financial engineering technology have brought us to the forefront of Japanese credit markets.
Our structured credit team focuses on the following central areas both for our customers and for our own balance sheet:
- Credit risk hedging
- Reducing credit risk associated with individual exposure or portfolio risks - Credit risk based investments
- Creating new investment assets through the transfer of credit risk from one party to another - Capital management
- Helping investors actively manage capital requirements related to credit risk exposure by transferring the underlying credit risk
New technologies and instruments such as credit derivatives enable financial institutions and corporations to transfer credit risk and, therefore, facilitate credit risk and capital management. As an active participant in the Japanese credit derivatives market, Shinsei diligently promotes the advancement of this area in accordance with global standards to deliver the best credit risk and capital management solutions possible.
Growth of the credit derivatives market has also facilitated new investment opportunities through the use of financial engineering technology. Synthetic securitizations — which incorporate credit derivatives — provide investors with access to investments in specific classes/pools of assets that would otherwise be unavailable in the cash (bond/loan) markets. These products include:
- Credit linked notes or loans
- Collateralized debt obligations (CDOs)
- Total return swaps and credit default swaps
These products can all be used to enhance portfolio diversification and improve risk-adjusted returns.
Despite liquidity becoming a critical focus of financial institutions and Japanese investors, the historical predominance of bilateral loans in Japan has inhibited development of a liquid Japanese credit market. Using advanced asset repackaging methods, Shinsei provides asset liquidity previously unknown in the Japanese market. Shinsei is also proactive in the primary loan syndication market, as a means to further develop liquidity and promote secondary market credit trading.
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