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.
-
Oaktree's ABF pipeline 'exploding'
After fielding over 300 deals worth US$20bn since 2023, the...
Oaktree Capital Management is experiencing an exponential increase in asset-backed finance (ABF) deal flow, with more than 300 unique transactions totalling nearly US$20bn crossing its desk since May 2023. The surge - driven by a shifting bank posture, public market dislocation and the firm’s push into unrated ABF opportunities - shows no signs of slowing.
“Our pipeline is .......
The Structured Credit Interview 16 June 2025
-
Job swaps weekly: RenaissanceRe promotes senior SRT executives
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees RenaissanceRe elevating two SRT leaders in a round of senior executive promotions. Elsewhere, Bayview Asset Management is building out its ABF capabilities with the addition of a senior advisor in its insurance asset management business, while AlbaCore Capital Group has appointed an md and portfolio manager for its European CLO platform.
Market Moves 13 June 2025
-
Views from Barcelona: EC vote, positive CLO outlook and fintech considerations
Global ABS participants anticipate smoother sailing ahead fo...
Securitisation markets may benefit from increased stability in the months ahead, according to speakers at FT Live Fixed Income Events' Global ABS conference. Practitioners broadly expressed hope that turbulence surrounding Trump’s Liberation Day tariffs was easing, and looked ahead as the European Commission prepares to vote on the joint committee proposals for EU securitisation regulation.
The new proposed .......
News 11 June 2025
-
Views from Barcelona: EC capital proposal could be 'transformational'
The SRT market continues to gather momentum, with 2025 shaping up to be a year of growth and diversification, according to speakers at AFME and FT Live’s Global ABS conference. ‘De-Risky Business: SRT Market Overview’ panellists pointed to a broadening issuer base, surging investor demand and regulatory developments as key drivers behind the sector’s evolution.
“SRT is no .......
News 11 June 2025
-
FDIC fires SLR reform salvo
Banking regulator issues proposal to change current rules
News 11 June 2025
-
Latest SRTx fixings released
EU/US divergence revealed
While last month’s SRTx data points illustrated a one-directional widening in spreads and credit risk, this month’s figures point to an overall divergence between the European and US markets.
Analysing the broader macro picture, investors and market participants largely suggest that, as severe as the market reaction was to tariff announcements, the rally has been equally impressive within for .......
News 11 June 2025
-
Views from Barcelona: Unfunded SRT volumes to double
Unfunded SRT deals could double over the next three to five years, according to Munich RE’s Michael Heckl. Speaking at FT Live Fixed Income Events’ Global ABS conference, Heckl said the volume of insurance-protected tranches post-syndication is expected to grow, though the (re)insurance market remains small, with just 14 active insurers in Europe. Insurance-backed deals made up just .......
News 10 June 2025
-
Proceed with caution: SRT market navigates macro uncertainty
Eagle Point Credit Management discusses current trends
News 10 June 2025
-
One begets another: Third Coast gets new deal thanks to April execution
Innovative APV/ABS structure allows drastic reduction in RW
News 9 June 2025
-
Secondary SRT market likely to remain a tactical option
Analysing the current outlook for secondary SRT market volumes
News Analysis 9 June 2025
-
-
Third Coast Bank and EJF hit the tape again
Asset manager and Texas bank securitize CRE assets
News 4 June 2025
-
-
EC proposes 'serious' adjustments to the CRR and SecReg
Leaked drafts point towards 'consistent and predictable' SRT framework
This week, two draft documents from the European Commission (EC) regarding proposed adjustments to the CRR and Securitisation Regulation were leaked. The picture that has emerged thus far is largely positive. Nevertheless, market sources warn that the devil remains in the detail.
The prevailing regulatory atmosphere in Europe is one of simplifying and reducing the burden for both .......
News 29 May 2025
-
Setting the scene
Ahead of her panel appearance at FT Live Fixed Income Events...
Q: The Global ABS Conference is just around the corner – which SRT topics or panels are you most looking forward to?
A: We are always interested in asset classes experiencing significant growth, such as digital infrastructure and fund finance. We are also very focused on the geopolitical environment and the effects of tariffs and/or a .......
The Structured Credit Interview 28 May 2025
-
JPM has brought auto loan private CRT
Prolific US CRT issuer appears on radar screen
News 23 May 2025
-
Job swaps weekly: LGT names leadership team for European CLO platform
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees LGT Capital Partners making senior appointments to support the launch of dedicated European CLO management platform Legato. Elsewhere, Reed Smith has hired a new partner to serve as head of its Asia-Pacific corporate trust and agency practice, while Ogier has recruited a counsel in its Luxembourg-based banking and finance team.
Market Moves 23 May 2025
-
-
Forced buyer
Increasingly crowded SRT market should experience natural rotation in investor base
With (consistently) increasing demand a shaping factor of the SRT market, investors could possibly revise their approach and trade selection process. In fact, hearsay suggests that the SRT market might be bifurcating, with on one side the (very) syndicated and programmatic processes and on the other, one where banks are looking to solve something other than regulatory capital relief .......
News 21 May 2025
-
Job swaps weekly: SAF Group hires md for new ABF strategy
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees SAF Group naming the md who will lead its new ABF strategy. Elsewhere, BCLP has appointed a London-based partner in its corporate and finance transactions department, while SMBC has hired a new head of FIG coverage and securitised products for the EMEA region.
SAF Group has recruited Nur Khan as .......
Market Moves 16 May 2025
-
SRT allocation
US pension backs Arrowmark with $225m as SRT strategies gain traction with LPs
The $42bn Iowa Public Employees’ Retirement System (IPERS) has backed the synthetic securitisation market at scale, with a $225m allocation to Arrowmark Partners' (Arrowmark) SRT strategy.
The risk-sharing mandate, which begun with a $100m allocation and grew by an additional $125m last year, gives a rare glimpse into how institutional allocators are thinking about SRTs as part of their .......
News 16 May 2025