SRT markets kick US banks’ caution to the kerb

Market for capital relief trades continues apace despite US banks’ reluctance to offer leverage

Synthetic risk transfer (SRT) markets are shrugging off what traders say is hesitance by US banks to offer leverage on certain transactions – they say deal pricing remains tight and financing terms from other lenders unchanged.

Reports of foot-dragging by US lenders come as regulators and watchdogs raise questions about leverage in the growing market, in which banks transfer risk to hedge funds and insurers, but the exact scope of their skittishness remains unclear.

Investors have borrowed to