Bank of America is drawing up plans to structure risk transfer deals for smaller lenders, a move that could turbocharge the nascent market at a time of heightened scrutiny.
So-called synthetic risk transfers — or SRTs — have quickly become one of the fastest-growing corners of financial markets for banks and private capital investors.
Banks use SRTs to obtain protection against losses on a pool of loans by selling a slice of the credit risk to investors, paying the investors regular fees for taking it on.
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