PRUPIM has rebalanced one of its funds through £100m of sub-sector swap trades with a single counterparty in the property derivatives market.
PRUPIM has made a series of paired trades going short and long on different sectors with Royal Bank of Scotland as the counterparty. Will Robson, PRUPIM’s head of property derivatives, who worked on the transaction with Paul Rostas of broker ICAP, declined to say how many sub-sectors, or which ones, the fund traded on.
The deal is signiﬁcant because there have been hardly any sector or subsector trades so far in the property derivatives market. The only other one this year was a £20m shopping centre trade three months ago, also involving RBS.
“We hope this will be seen as a milestone trade and a kick up for liquidity in subsector trading,” Robson said. “At ﬁrst we thought we would have to do it in smaller lumps and by trading with a different counterparty for each position, but RBS was prepared to take all the risk itself.”