Morgan Stanley Uses Credit Protection Deals to Free Up Capital
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Morgan Stanley bought $300 million in protection against loan losses from Blackstone and others to reduce capital requirements.
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Banks are considering different types of credit risk transfer deals to free up capital under new regulations.
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Investors in these deals include hedge funds, shifting risk outside traditional banking.
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Regulators approved Morgan Stanley's deal but are watching risks in these transactions closely.
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Banks have sold or are looking to sell risk on over $100 billion in assets to optimize capital and maintain market share.