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.


  • SCI Start the Week - 16 March

    A review of securitisation activity over the past seven days

    SCI NPL Securitisation Awards 2020 As a result of COVID-19, the SCI NPL Securitisation semina...

    News    16 March 2020
  • Multi-tranching?

    Investor diversification raises triple-tranche prospects

    Seer Capital sees a future for triple tranche structures in significant risk transfer transactions....

    News Analysis    13 March 2020
  • Definition debate

    Call for coalescence around ESG standards

    Impact is still being defined in the capital markets, both at a conceptual level and in terms of gen...

    News Analysis    12 March 2020
  • Regulatory events

    Standard Chartered amends Gongga SRT terms

    Standard Chartered has amended the regulatory event definitions for the class A notes of a corporate...

    News    12 March 2020
  • SCI Start the Week - 9 March

    A review of securitisation activity over the past seven days

    Transaction of the week AmTrust International has completed its inaugural capital relief trade, whi...

    News    9 March 2020
  • Opaqueness premium

    Regulatory RWA variability highlighted

    In its latest Working Paper, the BIS unveils a new measure of risk-weighted asset variability &n...

    News    4 March 2020
  • Bulgarian micro loan guarantees inked

    Sector developments and company hires

    Bulgarian guarantees The EIF has signed new guarantee agreements with Unicredit Bulbank, United Bul...

    Market moves    4 March 2020
  • Green light

    OCC gives regulatory approval to JPM CRT

    JP Morgan Chase has won favourable regulatory treatment from the Office of the Comptroller of the Cu...

    News Analysis    3 March 2020
  • Provisioning hedge

    Landmark Italian SRT inked

    AmTrust International has completed its inaugural capital relief trade, which references a &euro...

    News    2 March 2020
  • SCI Start the Week - 2 March

    A review of securitisation activity over the past seven days

    New MRT report SCI has published a new Special Report on the US Mortgage Risk Transfer sector &...

    News    2 March 2020
  • Risk transfer round-up - 28 February

    CRT sector developments and deal news

    Banca Monte dei Paschi di Siena is rumoured to be readying an SME SRT for next month, with the count...

    News    28 February 2020
  • MRT evolution

    US Mortgage Risk Transfer report now available

    Pioneered by Fannie Mae and Freddie Mac the US mortgage risk transfer (MRT) market is growing strong...

    News    27 February 2020
  • UK SRT debuts

    Opel prepping full-stack auto ABS

    BNP Paribas is marketing Opel’s second full-stack auto ABS from the E-CARAT programme. Dub...

    News    25 February 2020
  • High-profile bankers exit SRT

    Sector developments and company hires

    SRT departures Last week saw a couple of high-profile exits from SRT banking teams in London. Struc...

    Market moves    24 February 2020
  • SCI Start the Week - 24 February

    A review of securitisation activity over the past seven days

    REMINDER: SCI NPL Securitisation Awards 2020 Nominations are now open for the inaugural SCI N...

    News    24 February 2020
  • Moving down

    Insurers target first-loss CRTs

    Insurers are now targeting the first-loss tranches of capital relief trades, having eyed the senior...

    News Analysis    21 February 2020
  • SRT fund launched

    AXA engineers return

    AXA Investment Managers has completed its eighth partner capital solutions fund. With the move, the...

    News    21 February 2020
  • Risk transfer round-up - 20 February

    CRT sector developments and deal news

    Further details have been revealed of CRT transactions that were completed in 4Q19. One is another B...

    News    20 February 2020
  • SME double

    EIF closes pair of EFSI guarantees

    The EIF has closed two new guarantee agreements supporting European SMEs, both of which are supporte...

    News    19 February 2020
  • SCI Start the Week - 17 February

    A review of securitisation activity over the past seven days

    REMINDER: SCI NPL Securitisation Awards 2020 Nominations have now opened for the inaugural SC...

    News    17 February 2020
  • ArrowMark acquires investment platform

    Sector developments and company hires

    Acquisition ArrowMark Partners has acquired the bank investment platform and assets of StoneCastle...

    Market moves    14 February 2020