Credit Risk Transfer Transactions Find Growing Interest from Banks and Investors

According to Reuters, U.S. banks issued an estimated $7 billion in credit risk transfers (CRTs) in 2023, protecting against the risk of losses on mortgage and auto loans, and on corporate loans which are expected to see more capital charges under proposed Basel rules. Currently, Federal Reserve regulations restrict insurance company investors from these transactions, but novel structures involving intermediary buyers could open a path to future participation.

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