Apollo acquires more than half of risk on Deutsche Bank’s $3bn loan portfolio

Apollo Global Management is reported to have acquired more than half of Deutsche Bank’s significant risk transfer (SRT) on a $3bn (£2.2bn) leveraged debt portfolio.

According to Bloomberg, sources close to the deal have confirmed that the SRT is part of Deutsche Bank’s Loft program, although representatives at Apollo and Deutsche Bank have declined to comment on the private deal.

Read more: Apollo inks $5bn funding commitment from BNP Paribas

SRTs enable banks to divest some of the risk attached to certain loan portfolios. In this case, Deutsche Bank will retain the assets, but Apollo will share any future losses in return for a small share of the yields.

Bloomberg News reported earlier this month that Deutsche Bank increased the size of the transaction following strong demand from investors.

Read more: $25bn Apollo/Citi deal brings private credit into the mainstream

Data compiled by Bloomberg reveals that a high-risk portion of the $420m of bonds was priced at 10.5 percentage points more than the secured overnight financing rate.

Meanwhile, a mezzanine portion of $120m, which is intended to absorb losses, was priced at a spread of 3.75 percentage points over the benchmark rate.

Global issuance of SRTs for 2024 is anticipated to hit between $28bn and $30bn, according to figures from Chorus Capital released in July.

SRT issuance was around $24bn last year, which Bloomberg reported is the highest annual volume on record.

Read more: Deutsche Bank bolsters Asia private credit team