Credit, where it’s due
The credit insurance market appetite runs down from investment grade to B / B2 and across a range of products from term loans and RCFs through to derivatives, asset-backed lending and securitizations.
Overview
Credit insurance is an effective form of unfunded risk transfer that protects creditors against counterparty non-payment. Protection can be structured to cover up to 90% of an insured’s exposure to a reference obligation; which can be an individual debt owed by a particular counter party or a diversified pool of obligations.
Our credit team specializes in advising on the applications and benefits of the credit insurance product specifically for corporate and investment banks. We employ a team of experts from the fields of banking, insurance and law to add value no matter what the client’s objectives. We are equally comfortable supporting deal teams working to a strict syndication timetable as we are execution teams within portfolio management with a very different set of priorities.
Benefits
Credit insurance offers a range of benefits for banks, such as:
Offering an alternative to syndication;
Maximizing lending capacity while complying with credit limit constraints;
Risk-weighted assets (RWA) reduction;
Concentration risk management; and
Mitigation of negative migration (‘fallen angel’) risk.
As a form of silent sub-participation, credit insurance also has certain advantages over syndication by allowing insureds to:
Defend client relationships from competitors; and
Retain more interest and fee income.
