Street Calls of the Week
Investing.com -- Morgan Stanley is preparing to sell a significant risk transfer (SRT) connected to a $6 billion portfolio of loans to private market funds, according to Bloomberg, citing sources familiar with the matter.
The SRT could reach approximately $750 million in size, representing about 12.5% of the total loan pool, the sources said, requesting anonymity because the information is not public.
SRTs function as insurance mechanisms for banks against loan defaults. These instruments are typically issued as credit-linked notes to pension funds, sovereign wealth funds, and hedge funds. This arrangement allows the issuing bank to free up capital that would otherwise be allocated to meet regulatory requirements.
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