Santander scores solution for costly undrawn revolver exposures

By Owen Sanderson
10 Feb 2020

Santander has bought credit protection on two portfolios of undrawn revolving credit facilities, taking advantage of a regulatory decision last year to sharply boost the efficiency of the protection. The deal points the way for banks to cut the costs of providing revolvers, which are usually extended as a ‘loss leader’ for a broader banking relationship.

Revolving credit facilities for investment grade borrowers are a necessary evil for a capital markets bank. A corporate will almost never mandate a bank on a bond deal or other piece of markets business unless the bank has joined its panel of relationship lenders — which means committing ...

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