PGGM and PFZW value CRS as an asset class with a dedicated allocation in the long-term asset mix. Firstly, because CRS offers an attractive risk-return profile and allows for diversification of exposures to credit risk. As such CRS helps providing pensions for our beneficiaries in the long term. Secondly, when structured appropriately, CRS contributes to a more stable financial system. By helping the banking sector to partially reduce their credit risk exposures and share these with investors, systemic risk is reduced and the financial system becomes more sustainable. Thirdly, and essential today, transitioning the economy to achieve the Paris climate goals requires significant investments, part of which will require bank financing for which CRS transactions can be a valuable tool to attract the required capital.
As a long-term investor, we strongly believe in supporting a healthy and long-lasting market for credit risk sharing. To achieve this, CRS transactions must function appropriately for all relevant stakeholders: banks must benefit from a genuine sharing of credit risk and investors must benefit from a well-structured investment with an attractive return and easy-to-understand risk profile. Regulators must benefit from standardised transaction structures that are transparent. Through position papers, conference participations and dialogues with banks and regulators, we actively aim to improve understanding of this relatively unknown and developing asset class, as well as to stimulate healthy transaction standards throughout the market.
The purpose of this website is to further improve broad understanding and acceptance of CRS by sharing our knowledge and experience. Below we provide a high level overview of what CRS transactions are, and why and how we invest in CRS. We further share more detailed aspects of CRS transactions and how we diligence and structure these to ensure risks are adequately understood and mitigated where possible.
