Risk Participation Agreements (RPAs)

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In simple terms, this is a relatively new instrument where banks are sharing their risk related to interest rate swaps on participated loans. Generally, a lead bank enters into a swap with one of its borrowers and looks to offset some of their credit risk by participating-out a portion of the risk of default on the interest rate swap by the borrower to a participating-in bank. In exchange, the participating-in bank receives a fee from the participating-out bank.

sample: www.barrettwells.co.uk/risk_participation_agreement.html