S&P studies growth of credit risk transfer

Balance sheet management and dynamic allocation of credit exposure to increasing liquidity are just two of the drivers behind the popularity of credit risk transfer, according to Elwyn Wong, a director in the structured finance CDO group at rating agency Standard & Poor’s (S&P). Speaking at S&P’s risk solutions roadshow in New York earlier this month, Mr Wong explained that risk transfer could be funded through a true sale of assets, or unfunded (synthetic) through credit default swaps.