EBA pushes for tougher hedging after Premier Oil splits risk transfer market

Premier Oil’s restructuring last year was a test for the risk transfer market, as the different synthetic securitizations exposed to the troubled firm reacted very differently. The European Banking Authority wants to see a tougher approach and more consistency in the market, which could hurt some firms’ ability to transfer risk.

  • By Owen Sanderson
  • 15 Feb 2018

The European Banking Authority’s discussion paper on risk transfer published last year recommends that synthetic securitizations used to hedge bank loan portfolios include three credit events, matching those in the Capital Requirements Regulation — failure to pay, bankruptcy, and restructuring.

The first two credit events are standard, but ...

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GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

Bookrunners of Global Structured Finance

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1 Citi 23,299.13 64 12.42%
2 Bank of America Merrill Lynch 21,899.30 57 11.68%
3 Wells Fargo Securities 16,244.58 49 8.66%
4 JPMorgan 13,323.94 44 7.10%
5 Credit Suisse 10,691.12 19 5.70%