Capital relief trades make slow comeback from Covid slump

European synthetic credit risk transfer market now more expensive for banks

First aid euros

Synthetic securitisation deals transferring credit risk from banks’ loan books to buy-side firms are making a slow comeback from a coronavirus-induced slump, and dealers are finding the market has become more expensive for issuers.

“The market for synthetics has almost completely stopped,” says Robert Bradbury, a managing director at advisory firm StormHarbour Securities. “Almost everything that would normally have been done was put on hold.”

Lenders use balance sheet synthetic securitisations

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