Credit-Linked Notes
A credit-linked note (CLN) turns a private loan or credit agreement into a single bankable security with an ISIN. Investors take defined credit exposure in exchange for an enhanced yield, and issuers reach the capital markets beyond bilateral lending.
What is a credit-linked note (CLN)?
A credit-linked note (CLN) is a bankable security, identified by an ISIN, that transfers the credit risk of a reference entity, portfolio or index from the issuer to the investor. In return for taking on that risk, investors receive an enhanced yield compared with traditional fixed income. Think of it as a bridge: the CLN connects an investor's capital to the creditworthiness of a specific borrower or pool of borrowers.
If no credit event occurs during the term, investors receive their principal plus the agreed coupon. If a defined credit event occurs, they absorb the loss. Unlike a tracker or an actively managed certificate, a CLN is focused on credit exposure rather than asset performance, one more expression of assetization: turning a private credit agreement into a bankable security.
Advantages of CLNs for managers
Access private debt capital markets
Structure loan agreements and private placements as bankable CLNs, reaching institutional and private bank investors beyond the bilateral lending universe.
Tailor risk-return to the deal
Design fixed, variable, conditional or performance-linked coupons to match the exact economics of the underlying credit.
Protect investors with collateral
Pledge assets to back the note for enhanced security, or structure it unsecured where the borrower's credit profile supports it.
Transfer credit risk
Shift credit exposure off your balance sheet to investors, freeing balance-sheet capacity.
Deliver regular income
Provide predictable, periodic coupon payments, a yield-based profile for income-seeking allocators.
Off balance sheet
Independent, Swiss ISIN-backed products issued in a dedicated segregated compartment.
Advantages of CLNs for investors
Enhanced yield
Higher coupons than traditional bonds, in exchange for taking defined credit risk.
Diversified credit exposure
Single-name, sovereign or basket credit risk, in one bankable product.
Customizable risk-return
Choose structures matched to your risk appetite and return targets.
Access to credit markets
Participate in credit exposures that are difficult to reach directly.
How it works
Off-balance-sheet issuance, one Swiss ISIN.
Borrower or portfolio
- The credit the note is linked to, whether a borrower, portfolio or credit index.
Issuer SPV
- Sits in a dedicated segregated compartment and carries the Swiss ISIN.
Investor
- Holds the CLN in a custody account and receives the coupon, with principal returned at maturity absent a credit event.
Assetization in action
Real use cases, client success stories, live products.
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