Risk transfer to grow as Covid weighs on EM balance sheets

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By Jon Hay
29 Apr 2021

Structured transactions that transfer risk from banks’ balance sheets are set to grow in emerging markets as their financial systems become more sophisticated and lenders try to deal with losses caused by the Covid-19 pandemic. Multilateral development banks are playing a central role — they aim to stimulate private sector interest, even if sometimes investors resent their involvement. Jon Hay reports.

This week Crédit Agricole received a partial guarantee from the International Finance Corp on $4bn of emerging market trade finance loans, substantially all its book of those assets. The $182m second loss guarantee will free up about 90% of the capital Agricole had held against the loans, ...

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