Flickers of trading in SRT market as credit funds seek cash

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By Owen Sanderson
16 Apr 2020

Synthetic risk transfer deals from Deutsche Bank, Santander and Standard Chartered have been seen changing hands, as certain credit funds look to free up cash by selling assets that have drastically outperformed equity and junior debt in leveraged loan CLOs. Risk transfer deals are often bilateral and privately negotiated, with little or no public reporting, and usually held to maturity by the specialist funds that buy them.

Synthetic risk transfer deals ought to be first in the firing line for the coronavirus credit issues sweeping through markets. They offer banks junior-ranked protection on portfolios of SME loans, trade finance, and corporate credit, placing the hedge fund investors who buy the deals first in line to ...

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