Closing time for synthetic SME deals?

High-grade balance-sheet deals are in decline. But with demand for middle-market loan securitisations sky-high, banks still have the opportunity to shed unwanted risk from their books. However, these are unlikely to be synthetic. By Sarfraz Thind

The tide seems to have turned against traditional balance-sheet securitisation, with banks having packaged off the most liquid names on their books, and decreased appetite for new deals. But while high-grade volumes have shown a steady decline over the past few years, demand for middle-market loan securitisations has picked up. The market is, however, likely to see a shift away from the synthetic structures that have dominated to date.

Synthetic balance-sheet deals have declined steadily