Credit-linked products retain ‘sound rationale’

Credit linked products have been through a roller coaster ride in the last fifteen years. A variety of complex structures were seen in the lead-up to the credit crunch as spreads started to rise and issuers found inventive but seriously flawed ways to create high yielding products. These exploited rising credit spreads, choice of lower credit quality names, exotic payoffs and an exploitation of credit rating agency’s methodologies to claim inflated ratings. The asset class was also drawn