Synthetic NPLs gain traction

Pic© DV

Category: Capital Relief Trades ABS


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The ECB’s latest non-performing loan provisioning guidelines are expected to trigger increased synthetic NPL securitisation issuance. Nevertheless, defining a credit event for a portfolio of loans that are already non-performing remains a significant challenge.

The ECB guidelines prescribe full provisioning for unsecured NPLs after two years and seven years for secured NPLs.

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