Macquarie Capital completed significant risk transfer linked to high-yield corporate loansin a rare example of a non-bank lender making a foray into the market.
Alvarez & Marsal was an advisor on the transaction, according to people familiar with the matter. The SRT is tied to about $1 billion in loans, one of the people said.
Banks frequently use risk transfers to insure loans against default, generally obtaining protection for between 5% and 15% of the value of the loan, and allow them to increase their solvency ratios. While non-bank lenders are typically not subject to Basel rules, they still assess whether their capital buffers are large enough to absorb shocks. They also use SRTs to reduce concentration in certain industries and companies.
Representatives for Macquarie Capital and Alvarez & Marsal declined to comment. Macquarie Capital is the corporate advisory, capital markets and principal investment arm of Macquarie Group Ltd.
The SRT market will double over the next five years as banks in Europe and the United States increase their use of the instruments, according to Man Group Estimates. Hsbc Holdings Plc, Toronto-Dominion Bank, Erste Group Bank AG and BNP Paribas SA are among the lenders that are in talks or have recently completed SRT transactions.
Macquarie Capital had a private credit portfolio worth $17.4 billion at the end of September. It is part of Australia’s Macquarie Group which also provides global markets, commodities and asset management, as well as banking and financial services.
