ABN AMRO and Merrill Lynch today revealed they had executed the UK’s first sub-sector specific property derivatives swap.
The £10m contract related to UK shopping centres versus the return as measured by the Investment Property Databank’s UK Annual Index was agreed at an undisclosed price.
The two banks also carried out the first sector-specific swap for UK retail in November 2005 and ABN Amro’s first UK office sector swap in January of this year.
Cyrus Korat, head of structured credit trading at Merrill Lynch, said: ‘Sub sector swaps are generating a lot of demand and provide further evidence that clients are now comfortable with the product and the liquidity of the market and are looking to tailor it to their exact requirements.’
Dean Atkins, global head of structured finance trading at ABN AMRO, added: ‘Investors can use these trades to take advantage of different return profiles among UK property sectors and now sub-sectors and therefore make strategic switches depending on market predictions.’
CBRE-GFI acted as broker.