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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.


  • 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
  • Landmark guidance

    Implicit support guidelines published

    The EBA has published landmark implicit support guidelines as part of its post-coronavirus intervent...

    News Analysis    1 May 2020
  • Prudential flexibility reiterated

    Sector developments and company hires

    Prudential flexibility reiterated The European Commission has adopted a package to help facilitate...

    Market moves    29 April 2020
  • Opportunistic buying

    Covid-19 kicks off secondary SRT market

    Capital relief trade secondary market activity has received a boost from the coronavirus fallout as...

    News Analysis    28 April 2020
  • SCI Start the Week - 27 April

    A review of securitisation activity over the past seven days

    Last week's stories Accessing liquidity The role technology plays in securitising trade finance...

    News    27 April 2020
  • Recovery boost

    Weatherford revolvers fully repay amid negative outlook

    A new case study from SCI has revealed that oil and gas firm Weatherford International is referenced...

    News Analysis    24 April 2020
  • SCI Start the Week - 20 April

    A review of securitisation activity over the past seven days

    Last week's stories Bilateral activity Opportunistic capital redeployment underway Coverage...

    News    20 April 2020
  • Forbearance risks

    Pre-2015 GSE deals could suffer losses

    As the coronavirus spreads and servicers offer mortgage forbearance plans to struggling obligors, ce...

    News    17 April 2020
  • Discounted opportunities

    Insurers target SRT secondary market

    Insurers are now targeting the capital relief trades secondary market in search of discounted opport...

    News    16 April 2020
  • Bilateral activity

    Opportunistic capital redeployment underway

    The European ABS market appears poised to diverge between central bank-eligible issuance and opportu...

    News Analysis    15 April 2020
  • Risk transfer reboot

    Large corporate SRTs prepped

    Capital relief trade issuance is set for a comeback in 2Q20 as a handful of banks are readying large...

    News Analysis    14 April 2020
  • Modelling delinquency deluge

    Mortgage market advisers and consultants are struggling to find any models that work for the current...

    “Our clients are modelling a range of scenarios but are preparing themselves for the worst...

    News    8 April 2020
  • EIF calls for guarantee applications

    Sector developments and company hires

    EIF calls for guarantee applications The European Commission has unlocked €1bn from the Eu...

    Market moves    8 April 2020
  • Stochastic modelling

    IFRS 9 challenges persist amid pandemic

    Supervisors have advised banks to embed the effects of government programmes, such as payment morato...

    News Analysis    8 April 2020
  • SCI Start the Week - 6 April

    A review of securitisation activity over the past seven days

    Last week's stories Breathing space? EU banks benefit from Basel 3 delay Capacity con...

    News    6 April 2020
  • ESG catalyst?

    Positive impact SRTs gaining traction

    Significant risk transfer is primarily associated with achieving favourable capital treatment. Howev...

    News Analysis    3 April 2020
  • Breathing space?

    EU banks benefit from Basel 3 delay

    The Basel Committee's decision last week to delay implementation of the final Basel 3 rules...

    News    2 April 2020
  • CECL delayed

    EU banks await IFRS 9 relief

    The US Fed, the FDIC and the OCC last week approved an extension of the new credit loss accounting s...

    News    31 March 2020
  • Capacity constraints

    Covid-19 not yet posing solvency issues

    Government and central bank actions have kept both the financial system and the real economy afloat...

    News Analysis    30 March 2020
  • SCI Start the Week - 30 March

    A review of securitisation activity over the past seven days

    Transaction of the week Northern Arc Capital and fintech platform CredAble have closed a trade fina...

    News    30 March 2020
  • Closing the gap

    Audentia Global investor relations head Sophia Vanco and chief of staff Nick Makin answer SCI's ques...

    Q: How and when did Audentia Global become involved in the capital relief trades market? NM: Aude...

    The Structured Credit Interview    26 March 2020