Apollo Global Management, Carlyle Group and Ares Management have purchased the first known bonds that offload risk from bank loans extended to private credit funds known as business development companies. 

Earlier this year, Sumitomo Mitsui Banking Corporation sold securities known as ‘significant risk transfers’ to reduce risk from at least $3bn of credit lines it had provided to BDCs, according to sources cited in a Bloomberg report.

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The investors bought portions of the $375m (£282m) facility, according to people with knowledge of the transaction who spoke to Bloomberg on condition of anonymity. 

According to Twenty Four Asset Management, global SRT issuance reached a record of around $30bn in first-loss tranches in 2024, corresponding to nearly $300bn in underlying securitised loan assets – up from $150bn in 2021. More than half of that $30bn came from European and UK banks.

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“We have seen significant growth in the US since 2023, following regulatory guidance from the Federal Reserve”, Twenty Four said in an April blog. 

“Issuance has come from large banks looking to optimise their capital positions, while regional banks have used SRT to address specific pressures such as losses on their ‘available for sale’ securities or commercial real estate exposure.”

Ares declined to comment. Apollo and Carlyle have been contacted for comment.

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