Banks pitch flexible ‘sunset CSAs’ for pension funds, insurers

New-style contracts allow clients to post government bonds as swap collateral until clearing exemption ends

sunset-horizon
Sunset CSAs offer way around swap market two-tier pricing

Banks have come up with a way for European pension funds and insurers to avoid the two-tier pricing that has emerged in the swaps market between swaps with cash-only credit support annexes (CSAs) and those without.

By adding a clause to the terms of CSAs, banks are offering buy-side firms the opportunity to post government bonds as swap collateral until central clearing requirements force a move to cash – later this year for insurers, but probably not until 2018 for pension funds. At least one

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