BlackRock Manager Predicts 40% Jump in Bank Risk Transfer Deals

BlackRock Inc. is forecasting rapid growth for transactions that allow banks to shed risk in their loan portfolios as tougher capital rules take hold.

“Given greater acceptance of this as a tool and ongoing Basel III endgame regulatory pressures, there is a real world in which this market has a potential to grow at 30-to-40% each year for the next two years,” William Im, a director in BlackRock’s global opportunistic credit team, said in an interview before the release of a paper laying out the case for synthetic risk transfer deals.

SRTs, which pay yields in the mid-double ...