SRT Sales Cost Likely to Rise as War Fuels Economic Concerns

Banks are likely to face higher costs in issuing significant risk transfers as investors become more demanding in the face of growing economic uncertainty, according to a Bloomberg Intelligence survey conducted when traders were already assessing the prospect of a US military intervention in Iran.

Banks in Europe excluding the UK expect the cost to issue SRTs will rise to 14% of the capital relief benefit in 2027 from 11% in 2025, according to the survey of issuers and investors released Monday. For US banks the cost of issuing such transactions could rise to around 9% from about 6% of capital relief obtained with such transactions.