By Dan Jamieson, June 11, 2008
NEW YORK - Sales of structured products continue to grow despite the fact that they are often confused with subprime-tainted collateralized debt obligations, said Keith Styrcula, chairman of the Structured Products Association at a media briefing today in New York.
“Half of all news alerts talk about CDOs as structured products,” he said. “They're not CDOs; they're not subprime.”
Ratings agencies have added to the confusion by calling some of their CDO-ratings groups “structured-products groups,” Mr. Styrcula said.
The confusion has also caused some compliance officers at brokerage firms to wonder whether investors are being sold mortgage-backed bonds, he said in an interview.
Sales of structured products are expected to reach $120 billion this year, surpassing the record $114 billion in sales in 2007, according to the Structured Products Association.
In 2006, sales were just $64 billion.
Retail buyers have been increasingly interested in products with downside protection and strong credit ratings, according to industry participants on a panel at the briefing.
About 16% of sales this year have been in commodity-linked products, up from 8% last year, said Philippe El-Asmar, managing director and head of structured-product sales at Barclays Capital, the New York-based investment-banking division of London-based Barclays Bank PLC.
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SPA-2008
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