Risks and Rewards of Credit Derivatives:
How to Find Value in Credit Derivatives as an Investment Vehicle
November 10, 6:00 PM - 8:30 PM
Credit derivatives transfer risk efficiently. But market upsets can create market upheaval. How can firms use credit derivatives sensibly? How can traders maximize their value? Learn more.
Event to Outlook
450 North Cityfront Drive
Janet M. Tavakoli , '81
Tavakoli Structured Finance, Inc.
5:30 PM - 6:00 PM: Networking and Sponsor Table Review
6:00 PM - 8:00 PM: Presentation and Formal Discussion
8:00 PM - 8:30 PM: Informal Discussion and Networking (Cash Bar)
Note: You need not be a graduate of the University of Chicago GSB to attend, although program content is at MBA level. Guests are welcome; the courtesy of a pre-registration is appreciated.
Please register by November 9, 2005
Credit derivatives are the fastest growing financial product. Synthetic structured financial products and leveraged credit bets fueled explosive growth in the credit derivatives market (up 55% in 2004 versus 2003) and the growth rate for 2005 may be double that of 2004. Outstanding contracts reached $8.4 trillion by the end of 2004 and ballooned to $12.4 trillion by the end of June 2005.
Credit-derivatives trading influences everything from stocks and bonds to hedge funds, mutual funds and mortgages. Leveraged credit derivative products have become an important revenue source for insurance companies and bank trading books. The easy leverage of the credit derivatives market creates an ideal tool for speculators.
Used properly, credit derivatives can contribute to financial stability by making it easier to transfer risk efficiently. But market upsets like the recent downgrades of GM and Ford can create market upheaval. 'What started out to be a protection product for banks has turned out to be an opportunity to spin the roulette wheel,' says Janet Tavakoli, president of Tavakoli Structured Finance in Chicago. 'People are concerned about a domino effect.' (Wall
Street Journal May 29, 2005). Are the advantageous returns on credit derivatives blinding us to the inherent risks? How can corporations and financial institutions use credit derivatives sensibly and still capture a fair financial reward? Who should be trading credit derivatives in their investment portfolios and how can traders maximize their value?
Janet M. Tavakoli , '81
President, Tavakoli Structured Finance, Inc.
Janet Tavakoli is the founder and president of Tavakoli Structured Finance, Inc. (TSF), a Chicago based consulting firm for financial institutions and institutional investors. Ms. Tavakoli is a former adjunct associate professor of finance at the University of Chicago's Graduate School of Business where she taught "Derivatives: Futures, Forwards, Options and Swaps."
Tavakoli is the former Executive Director, Head of Financial Engineering in the Global Financial Markets Division at Westdeutsche Landesbank in London. She headed market risk management for the capital markets group for Bank One in Chicago. Tavakoli headed the asset swap trading desk at Merrill Lynch in New York, headed mortgage backed securities marketing for Merrill Lynch in New York, and headed mortgage backed securities marketing to Japanese clients for PaineWebber in New York.
She has appeared as an expert before forums of the International Monetary Fund, Federal Reserve Bank, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.
Janet Tavakoli earned her B.S. in Chemical Engineering from the Illinois Institute
of Technology and an M.B.A. in Finance from the University of Chicago.
is the author of the global bestsellers in their respective fields: Credit
Derivatives & Synthetic Structures 2nd Edition, John Wiley & Sons, 2001 (also in Japanese and Orthodox Chinese), and Collateralized
Debt Obligations and Structured Finance, John Wiley & Sons 2003.