Reported 4 months ago
Bloomberg reports a rising popularity in 'blind' wagers involving banks' risk transfer trades where investors, including pension funds and insurers, are taking on potential losses from loan failures without knowing the borrowers' identities. These synthetic risk transfers, involving blind loan pools, are being increasingly offered by banks globally as a way to insure loan portfolios and free up capital. While demand for these trades is high, buyers receive only minimal premiums, and buyers need to assess default risks and ensure compliance with ESG guidelines independently.
Source: YAHOO