Manulife CQS raises US$1.1 billion for synthetic-risk transfers

The money is for its Manulife CQS Regulatory Capital Relief III Fund as well as some separately managed accounts

Manulife’s credit arm CQS Investment Management has raised US$1.1 billion to invest in synthetic-risk transfers, according to a statement, the latest example of private credit funds drumming up cash to tap into banks’ assets.

The money is for its Manulife CQS Regulatory Capital Relief III Fund as well as some separately managed accounts, according to a statement. Manulife CQS has been investing, since 2014, in regulatory capital relief trades, also sometimes known as synthetic or significant risk transfers.

Banks, subject to strict capital rules, frequently adjust their balance sheets by either selling assets or creating instruments known as synthetic-risk transfers. SRTs let banks share risk with outside investors while keeping assets on their balance sheets. The value of banks’ synthetic securitisations has reached US$673 billion, expanding at a double-digit pace as lenders race to offload risk and free up capital.

Private capital fund managers have collectively raised billions to buy these deals in the US and Europe. Last year, AXA IM Alts raised US$2.5 billion to invest in SRTs, while UBS Group’s asset management unit is working on a new fund that will invest in SRTs and could include deals issued by the Swiss lender.

MCQS said it’s now accelerating plans to launch a fourth version of the fund, which will also focus on SRTs. Its SRT strategy sits within its structured credit business.

MCQS had US$18.5 billion as of the end of September, according to its website. Canada-based Manulife, an insurance provider as well as an asset manager, acquired CQS in 2024. BLOOMBERG

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