LOGIN
 

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.


  • TALF subscription date announced

    Sector developments and company hires

    TALF subscription date announced The New York Fed has scheduled the first TALF ABS loan...

    Market moves    20 May 2020
  • SME CLO, SRT PD adjustments mooted

    Sector developments and company hires

    SME CLO, SRT PD adjustments mooted DBRS Morningstar is considering additional adjustments to refl...

    Market moves    18 May 2020
  • SCI Start the Week - 18 May

    A review of securitisation activity over the past seven days

    Last week's stories Auto ABS boost European ABS market update Drafting issues The potential...

    News    18 May 2020
  • Conflict of interest charge settled

    Sector developments and company hires

    Conflict of interest charge settled The US SEC has charged Morningstar Credit Ratings for violating...

    Market moves    15 May 2020
  • Unknown unknowns

    Covid-19 modelling challenges persist

    Banks are running simulations in an effort to address the credit risk modelling challenges of the co...

    News Analysis    15 May 2020
  • SRTs unlocked

    BMO launches capital relief trade

    Bank of Montreal has finalised a US$132m five-year financial guarantee dubbed Manitoulin Muskoka Ser...

    News    15 May 2020
  • TALF CLO rules clarified

    Sector developments and company hires

    TALF CLO rules clarified The US Federal Reserve has clarified its CLO eligibility rules for TALF. I...

    Market moves    13 May 2020
  • Risk transfer round-up - 13 May

    CRT sector developments and deal news

    Bank of Montreal is rumoured to be prepping a corporate loan capital relief trade for 3Q20. The lend...

    News    13 May 2020
  • SFSF investments disclosed

    Sector developments and company hires

    SFSF investments disclosed The AOFM has disclosed the recent investments it has made under the Stru...

    Market moves    12 May 2020
  • SCI Start the Week - 11 May

    A review of securitisation activity over the past seven days

    Last week's stories CRM tool CBILS guarantees eligible for CRR recognition EC decision awaite...

    News    11 May 2020
  • Drafting issues

    Assia Damianova, special counsel at Cadwalader, Wickersham & Taft LLP, considers the potenti...

    CRTs typically consist of a credit transfer instrument entered into between the credit institution a...

    Talking Point    11 May 2020
  • EC decision awaited

    Preferential capital treatment mooted for STS synthetics

    The EBA’s framework for STS synthetic securitisations (SCI 6 May) is broadly in line with...

    News Analysis    7 May 2020
  • CRM tool

    CBILS guarantees eligible for CRR recognition

    The UK PRA published at the end of April a statement clarifying whether Coronavirus Business Interru...

    News    7 May 2020
  • Risk transfer round-up - 7 May

    CRT sector developments and deal news

    BBVA is rumoured to be readying a capital relief trade for 2Q20. The lender has completed a total of...

    News    7 May 2020
  • STS synthetics proposals published

    Sector developments and company hires

    STS synthetics proposals published The EBA has published its proposals for developing an STS framew...

    Market moves    6 May 2020
  • Romanian SRT inked

    Uncapped guarantee completed

    The EIF and nine Romanian banks have completed an uncapped guarantee agreement from the SIUGI progra...

    News    5 May 2020
  • Ratings resilience

    Shorter pro-rata periods to benefit SRTs

    A sharp deterioration in asset performance due to the coronavirus fall-out may lead to sequential pa...

    News    5 May 2020
  • WAM guidelines finalised

    Sector developments and company hires

    WAM guidelines finalised The EBA has published its final guidelines on the determination of the wei...

    Market moves    4 May 2020
  • SCI Start the Week - 4 May

    A review of securitisation activity over the past seven days

    Last week's stories Cautiousness prevails European CLO market update CRT vol aims for the sta...

    News    4 May 2020
  • CRT vol aims for the stars

    No longer staid and dependable, the CRT market is at record-breaking volatility

    Despite a levelling out in April, volatility in the credit risk transfer market remains extremely el...

    News Analysis    2 May 2020
  • Risk transfer round-up - 1 May

    CRT sector developments and deal news

    Deutsche Bank is rumoured to be readying a large corporate capital relief trade for 2Q20. The bank&a...

    News    1 May 2020