JPMorgan Chase & Co. is exploring a significant risk transfer involving a $2 billion portfolio of loans used to finance private jets, according to people familiar with the matter. The potential size of the structured risk transfer, or SRT, could reach approximately $250 million, equivalent to roughly 12.5% of the total loan pool. Deal terms remain fluid as discussions with investors continue, and a JPMorgan representative declined to comment.
SRTs allow banks to insure loans against default, often using credit-linked notes sold to pension funds, sovereign wealth funds, and hedge funds. These instruments help issuers free up capital that would otherwise be tied to regulatory requirements while managing exposure to specific industries or loan types. Investors, in turn, can earn double-digit yields while lenders typically secure default protection covering 5% to 15% of the underlying loans’ value. Bloomberg reports that this approach is increasingly being applied beyond traditional corporate debt to loans backing luxury assets such as private jets and, potentially, artwork.
Interest in high-yield credit deals has expanded as investors seek attractive returns in a low-rate environment. Bloomberg Intelligence recently surveyed the SRT market, projecting it could grow at an average annual rate of 11% over the next two years. Other major banks, including Goldman Sachs Group Inc., UBS Group AG, Banco Santander SA, and ING Groep NV, have also been discussing or finalizing dollar-denominated SRTs, signaling broadening acceptance of these instruments across the global financial sector.
JPMorgan’s move underscores the growing trend of using structured products to transfer risk in niche lending markets, reflecting both investor appetite for high-yield exposure and lenders’ efforts to optimize capital efficiency in an evolving regulatory landscape.
