Circle 30 January 2027 if you are in European credit.
On this day, the latest ๐ฆ๐ผ๐น๐๐ฒ๐ป๐ฐ๐ ๐๐ ๐ฑ๐ฒ๐น๐ฒ๐ด๐ฎ๐๐ฒ๐ฑ ๐ฟ๐ฒ๐ด๐๐น๐ฎ๐๐ถ๐ผ๐ป ๐ฐ๐ต๐ฎ๐ป๐ด๐ฒ๐ start to apply, materially reshaping how EU insurers can treat ๐๐ฒ๐ป๐ถ๐ผ๐ฟ ๐๐ฒ๐ฐ๐๐ฟ๐ถ๐๐ถ๐๐ฎ๐๐ถ๐ผ๐ป๐ (including AAA CLO tranches) from a capital perspective.
One calibration illustrates the magnitude: for a ๐๐ฒ๐ป๐ถ๐ผ๐ฟ ๐๐๐ ๐๐๐ข ๐๐ฟ๐ฎ๐ป๐ฐ๐ต๐ฒ (example: ~3-year modified duration), the spread-risk capital factor moves from ~๐ฏ๐ณ.๐ฑ% ๐๐ผ ~๐ด.๐ญ% (about a ๐ณ๐ด% reduction).
In plain terms: the asset class shifts from โeconomically unattractiveโ to โportfolio-relevantโ for many insurers.
๐ช๐ต๐ ๐๐ต๐ถ๐ ๐บ๐ฎ๐๐๐ฒ๐ฟ๐:
โข EU insurers manage ~โฌ๐ญ๐ฌ๐๐ป in assets, yet securitisations are <๐ญ% of typical portfolios today.
โข Even a move back toward ๐น๐ผ๐-๐๐ถ๐ป๐ด๐น๐ฒ-๐ฑ๐ถ๐ด๐ถ๐ allocations would be market-moving.
โข The real work happens in ๐ฎ๐ฌ๐ฎ๐ฒ: risk frameworks, governance, data/reporting, manager due diligence, and origination/syndication capacity.
๐ ๐ ๐พ๐๐ฒ๐๐๐ถ๐ผ๐ป (๐ฝ๐ถ๐ฐ๐ธ ๐ผ๐ป๐ฒ): ๐๐ต๐ฎ๐ ๐ฏ๐ฒ๐ฐ๐ผ๐บ๐ฒ๐ ๐๐ต๐ฒ ๐ฏ๐ถ๐ป๐ฑ๐ถ๐ป๐ด ๐ฐ๐ผ๐ป๐๐๐ฟ๐ฎ๐ถ๐ป๐ ๐ถ๐ป ๐ฎ๐ฌ๐ฎ๐ฒ?
A) governance & risk appetite / internal model readiness
B) data transparency, reporting & operational capacity
C) product supply (quality European collateral + structures)
D) distribution (relationships, syndication, warehousing)
Comment ๐โ๐ (and your sector: insurer / manager / bank / advisor / policymaker).