Yahoo Finance Intesa Plans SRT Deals Tied to at Least €4.5 Billion of Loans
(Bloomberg) -- Intesa Sanpaolo SpA is working on deals to sell credit-linked notes known as significant risk transfers tied to a pool of at least €4.5 billion ($4.8 billion) of loans, according to people familiar with the matter.
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The Milan-based bank is marketing two so-called SRTs linked to €1.3 billion of leveraged loans and €1.2 billion of commercial real estate loans, said the people, who asked not to be identified because the deals are private. Intesa also plans to issue SRTs associated to about €2 billion of large corporate loans, according to some of the people.
The deals will be completed in the second half of the year, leading the total loans for which Intesa buys protection this year to about €10 billion, some of the people said. A spokesman for Intesa declined to comment.
Also known as synthetic risk transfers, SRTs allow banks to insure their loans against default by selling notes to pension, sovereign wealth and hedge funds. That enables lenders to tie up less of their own capital to meet regulatory requirements, while investors can pick up yields in the low double-digits.
Typically, a bank would obtain default protection for as much as 15% of potential losses. In return, investors receive a coupon on their holdings. They’ve become a fast-growing part of credit markets, totaling over €206 billion in 2023, up from around €97 billion in 2020, according to data compiled by AXA IM Alts.
Intesa’s peer UniCredit SpA is working on three significant risk transfer deals linked to as much as €8.5 billion, Bloomberg reported last month.
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