Capital Relief Trades
Capital relief trades are deals put together by banks to sell on to investors to reduce the bank's regulatory capital requirements.
Such deals can take many forms, but SCI focuses on those where synthetic or securitisation structures are utilised.
Those deals can be broken down into the following broad categories (deals can be combinations of these categories):
CDS - credit default swaps: in the capital relief trade context, this denotes deals that utilise such instruments to transfer credit risk.
CLN - credit-linked note: in the capital relief trade context, this denotes the deal is structured as a note with an embedded credit derivative.
Fin gtee - Financial guarantee: a means of structuring a capital relief trade, whereby the investors benefit from a guarantee that all the issuer's obligations will be met.
Funded: where a capital relief trade is understood to have been structured using a credit derivative (CDS, CLN, synthetic CDO etc) with the protection seller making an initial payment.
Unfunded: where a capital relief trade is understood to have been structured without an initial payment being made under the credit derivative (CDS, CLN, synthetic CDO etc).
True sale: a capital relief trade based on a cash securitisation structure rather than a synthetic securitisation structure.
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SRT fast-track testing underway
Market updates and sector developments
The ECB is set to begin testing a new fast-track process for the supervisory assessment of SRT, which it has developed in close dialogue with the European Banking Federation. The SRT assessment of an individual securitisation transaction currently takes about three months, but the fast-track process aims to substantially reduce this time for sufficiently simple securitisations meeting certain requirements.
Market Moves 19 February 2025
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Job swaps weekly: ARC promotes two and appoints APAC chair
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees ARC Ratings making a number of senior structured-credit-focused appointments spanning Europe and Asia. Elsewhere, Cadwalader has added three fund finance partners in London, while CIFC Asset Management has named a new md overseeing CLO tranche investing in its New York office.
ARC Ratings has promoted two Lisbon-based structured finance executives .......
Market Moves 14 February 2025
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Ever closer
Norwegian SRT market gets further boost
Last week, the Norwegian government has submitted its proposal for SecReg implementation to the Parliament for formal approval.[1]
Coincidentally or not, such announcement matches quite closely the Centre Party's exit from the ruling coalition, leaving the Labour Party to rule alone eight months before parliamentary elections. To bring added context to such shift, Norway’s Centre .......
News 14 February 2025
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Regional views from New York
Conference roundup
SCI’s ninth annual risk transfer and synthetics seminar took place last week in New York, and the agenda covered a broad array of topics currently impacting the US CRT/SRT market. These ranged from regulatory reforms, the latest developments in the GSE market (including whether a release from conservatorship is on the table), new assets in the region, relative value, .......
News 13 February 2025
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Fools rush in...
GSE exit from conservatorship needs careful handling, says SFA
News 12 February 2025
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Potential new player identified for SRT issuance
SRT market update
Financial sector research firm Autonomous Research (Autonomous) has identified a major European bank as a prime candidate for future SRT issuance.
A well-known fact in the SRT market is that transactions referencing portfolios of large corporate loans comprise the majority bulk of issuance. For the leading investment banks, SRT has now become an integral part of their “originate .......
SRT Market Update 10 February 2025
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Job swaps weekly: Haynes Boone poaches asset securitisation team
Securitisation people moves and key promotions
This week’s round-up of securitisation job swaps sees Haynes Boone strengthen its fund finance and asset securitisation practices with the hiring of seven attorneys from Seward & Kissel in New York. Elsewhere, several other law firms have added partners in Australia and Japan, while ARC Ratings has recruited a new Hong Kong-based ceo to spearhead its expansion in the .......
Market Moves 7 February 2025
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Job swaps weekly: Oaktree puts the boosters on ABF team build-out
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees Oaktree making a number of key appointments as it ramps up its asset-backed finance strategy. Elsewhere, Morgan Lewis has snapped up a structured finance partner from Akin Gump, while Blackstone has hired a former Atlas SP director as principal in its credit and insurance platform.
Oaktree Capital Management has hired .......
Market Moves 31 January 2025
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Leverage anxiety
Reg cap marketeers rebuff regulator concern over leverage
News Analysis 30 January 2025
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Assertive response
ACC issues comment letter
The Alternative Credit Council (ACC)[1] provided a response to the International Monetary Fund’s (IMF) Global Financial Stability Report (GFSR), opening a dialogue and challenging technical assumptions.
Last October, the IMF disputedly argued that certain innate SRT characteristics could increase risks to financial stability, notably the perceptions that SRTs may elevate interconnectedness and create negative .......
News 17 January 2025
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Job swaps weekly: Axis hires structured credit lead
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees Axis appointing a new SRT-focused structured credit lead in its capital risk solutions team. Elsewhere, Orrick has promoted two securitisation lawyers to partner in New York, while Ares Management has elevated a partner to co–head of alternative credit.
Insurance and reinsurance business Axis has hired Bryan Niggli as structured credit lead .......
Market Moves 17 January 2025
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SCI in focus: Risk transfer at the ready
CRT an invaluable tool in GSE march to privatization – and beyond
Privatisation of the GSEs is back on the cards, but this time around CRT could play a crucial role not only in accelerating the route out of conservatorship but also in maintaining capital requirements once the exit has been made, say market experts.
News Analysis 14 January 2025
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Latest SRTx fixings released
Comprehensive consolidation
Having moved into 2025, the US election result unsurprisingly remains a point of focus, with the Trump win expected to translate into less stringent antitrust regulations and lower interest rates, sparking more M&A transactions and driving dealmaking in private credit. Nevertheless, varying views across the globe with respect to political ideology, and differentiating views on the levels of interest .......
News Analysis 14 January 2025
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