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ARTICLE · 28 JULY 2004

The Credit Risk Transfer Market

Barlow Lyde & Gilbert LLP
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The Credit Risk Transfer (CRT) market, where credit risks are packaged/sold by banks to buyers of securities/loans and writers of credit insurance/derivatives is probably the fastest growing and most vibrant market in the global financial industry.

United KingdomFinance and Banking
Des Potter
Des Potter

The Credit Risk Transfer (CRT) market, where credit risks are packaged/sold by banks to buyers of securities/loans and writers of credit insurance/derivatives is probably the fastest growing and most vibrant market in the global financial industry.

A greater focus on risk management and a more disciplined approach to risk and return on a portfolio basis by large international banks, has led them to be net buyers of credit risk protection. In their quest to lessen the volatility of their earnings banks have become more active in originating and distributing loans rather than holding loans to maturity.

The insurance industry has become a net seller of credit risk protection, participating in this market from both sides of their balance sheet:

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