Goldman Sachs Sells SRT Tied to $2 Billion of Private Fund Loans.

Goldman Sachs is reportedly selling a risk transfer bond tied to a portfolio of approximately $2 billion in loans. The bond is connected to a pool of subscription lines, which are loans taken out by private market funds. The notes are expected to be priced at a spread of less than 500 basis points above a benchmark. This move by Goldman Sachs comes as Wall Street firms are anticipated to increase their use of risk transfer bonds due to potential regulatory capital requirements. In a risk transfer bond, banks issue notes linked to a pool of loans and credit derivatives to transfer credit risk and reduce the amount of regulatory capital needed. Investors typically receive a floating-rate coupon with yields on risk transfer bonds often exceeding 10%. Demand from large private- and structured-credit funds has helped lower risk transfer bond premiums. [Extracted from the article]