The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Apollo Global Management Inc. has acquired a significant portion of Deutsche Bank AG’s risk transfer related to a $3 billion leveraged finance debt portfolio. According to sources familiar with the matter, the New York-based asset manager purchased over 50% of the significant risk transfer (SRT) transaction, which was issued through Deutsche Bank’s Loft program.
In SRT transactions, banks transfer the risk associated with loan portfolios while retaining ownership of the assets. They pay investment firms to absorb future losses, typically securing default protection for up to 15% of potential losses. In exchange, investors often receive attractive yields, commonly in the low double digits.
Deutsche Bank increased the size of this SRT transaction due to strong investor demand, as reported by Bloomberg earlier this month. The SRT consists of a portfolio comprising various credit facilities and loans.
The riskiest tranche of the bonds, totaling $420 million, was priced at 10.5 percentage points over the Secured Overnight Financing Rate (SOFR). Additionally, a mezzanine tranche of $120 million, which absorbs losses after the junior tranche, was priced at 3.75 percentage points over benchmark rates.
As of now, global issuance of SRTs for 2024 is on track to reach between $28 billion and $30 billion, bolstered by a robust pipeline for the second half of the year. This anticipated volume marks a significant increase compared to last year’s record issuance of approximately $24 billion.
The transaction underscores the growing interest from investors in risk-sharing agreements as financial markets navigate evolving economic conditions.
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