Benchmark prior transactions, bonds, loans or company profiles using over 300 credit metrics.

Comparables

AI transcripts & instant analysis, making earnings season easier than ever.

Earnings

A full suite of ESG data and analysis. Built for your workflow

Spot undervalued credits and potential future restructurings with our purpose-built tools.

Distressed and Restructuring

Full Financial profiles with 3 statements, KPIs, segment splits & credit metrics. All traced to source documents.

Financials

New deal analysis and covenant comparison tools, understand key risks in seconds not days.

Covenants

Say goodbye to CTRL + F with our powerful search. Thousands of documents text searchable for any keyword or phrase.

Search

We've successfully predicted more than 65 price sensitive events - before they happened.

Deal predictions

We use AI to aggregate newsflow from 2,000 sources, and deliver it to your inbox quicker than anyone else.

News

Track high yield deals from issuance through to maturity, with integrated legal, credit and ESG analysis.

High Yield Bonds

Shine a light on private markets with 9fin's news and legal analysis of syndicated loans

Leveraged Loans

21st century tech and expert analysis to help CLO teams make informed decisions faster.

Structured Credit 

Find information others can't see in one of the fastest growing corners of finance

Private Credit 

Owen Sanderson

Undefined terms and aggressive transfer restrictions have put grit in the gears of the rapidly growing market for SRT transactions, prompting the Loan Market Association to start exploring ways to tweak loan docs to ease the SRT process.

SRTs (significant risk transfers) are a rapidly growing market allowing banks to hedge parts of their loan portfolios, by selling off the junior risk to a fund. Using a credit default swap, financial guarantee or insurance contract, banks are protected against a tranche of initial losses, and can then claim capital relief from their supervisors, cutting the costs of holding these portfolios without transferring the loans themselves.

These can reference any class of debt obligations, from mortgages to project finance, ship loans or commercial real estate, but corporate lending is common, both investment grade credit lines and leveraged finance or middle-market lending.

In leveraged lending and sponsor financing particularly, transfer restrictions have been tightening, with features like restrictive whitelists increasingly prominent. These have heavily affected trading and restructuring processes in cases such as GenesisCare and Accell.

The purpose behind these lists is to give sponsors control of who their ultimate lenders are, and specifically, to exclude distressed debt and loan-to-own specialists for as long as possible (whitelists typically fall away following a material event of default, but not before, and the definition of default can vary).

Transfer restrictions can also cover sub-participations, a common structure allowing a fund to assume the economic risk and responsibilities associated with owning a loan, but without becoming a lender of record as far as the loan agent is concerned. Transfer restrictions may differ depending on whether the sub-participation brings voting rights, or not.

The use of sub-participations is particularly common when banks seek to transfer risk on revolving credit facilities, which are more rarely traded than TLBs and where a bank wants to demonstrate its commitment to a sponsor relationship (by remaining lender of record).

Ambiguities in the language, though, can potentially restrict these facilities from inclusion in an SRT trade, since these give the end-investor some kind of risk participation in the loan. No physical transfer takes place, but the drafting is too woolly to rely on.

That’s unlikely to have been the intention behind the inclusion of this language; sponsors generally have no problem with banks actively managing their balance sheet and using a variety of hedging and capital management techniques.

But they may have simply opted for the best docs available in the market at the time, with the greatest flexibility for themselves and greatest limitations on their lenders. 

The LMA has started working on ways to solve this problem. The LMA ran a Credit Risk Insurance & Significant Risk Transfer event for the first time in September 2024, discussing this rapidly growing market.

The event was closed to media, but the organisation wrote up key takeaways from the sessions, noting challenges included “liquidity bottlenecks created by restrictive provisions in (often leveraged) loan documentation, impacting both information disclosure and asset transferability. These latter issues are caused, however, at a much earlier stage in the loan life cycle by borrowers and sponsors unable to see their relative importance as drivers of liquidity”.

Disclosure and confidentiality, as the LMA notes, can also constitute a problem for the SRT market. Investors in leveraged loan SRTs typically want to go line-by-line and assess individual credit exposures in a deal (in contrast to mortgage or SME SRTs, where a statistical approach is more common). But disclosure provisions allowing information to be passed to lenders of record can be too restrictive to encompass potential end-SRT investors, forcing them to look elsewhere for the relevant information on their leveraged finance exposures.

Explore our news and analysis for our latest scoops and in-depth analysis.

Unclear transfer language creates SRT loan challenge

Excess Spread — Sweet release, baked Danish

9fin team

Webinar Replay — Free fallin': Chapter 11 trends that defined 2025 and what's next

Sasha Padbidri

Luke Viner

The Singapore cross-class cramdown provision’s future is now

Webinar Replay — The art of the LME: defining trends in 2025, and looking ahead to what’s next

Save time, react faster to news, outperform your peers.

Asset Managers & Hedge funds

Save time, pitch more efficiently, and win business.

Investment Banks

Turbocharge your trading desk P&L, with the market's fastest news alerts.

Sales & Trading

Spot novel covenants, save time drafting and win business.

🍪 Our Cookies

Unclear transfer language creates SRT loan challenge

Read all our public content for free

Recently Published

Excess Spread — Sweet release, baked Danish

Webinar Replay — Free fallin': Chapter 11 trends that defined 2025 and what's next

The Singapore cross-class cramdown provision’s future is now

Webinar Replay — The art of the LME: defining trends in 2025, and looking ahead to what’s next

What are you waiting for?