This report does not constitute a rating action. The significant risk transfer market is gaining momentum. These instruments, generally known as SRTs, help banks manage capital and risks by offloading portions of lending portfolio credit risk to investors. Assessing underlying asset quality is crucial to determining investment fund risk. Private credit funds, among the largest SRT investors, increasingly seek leverage and credit ratings. Funds may use back leverage, including net asset value (NAV) facilities, repo and other forms of asset leverage. Some funds also use rated note feeders to attract prudentially regulated investors and create levered returns for the residual equity holders. Here, S&P Global Ratings answers investor questions about how we apply our Alternative Investment Funds (AIF) methodology to
