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(Bloomberg) -- BNP Paribas SA is offering a significant risk transfer linked to about €800 million ($830 million) of loans, according to people familiar with the matter.

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The potential transaction would be referenced to a portfolio of leveraged and corporate loans, said the people, who asked not to be identified because the matter is private. Terms, including the final size, may still change as a result of discussions with investors, which have been going on for several weeks.

A representative for BNP Paribas declined to comment.

SRTs allow banks to insure loans against default by selling credit-linked notes to pension, sovereign wealth and hedge funds. For lenders, the benefit is that they are able to tie up less of their own capital to meet regulatory requirements. In return, investors receive yields that frequently top 10%.

Typically banks sell a credit-linked note to cover the first 5% to 15% of losses, and if losses materialize, holders of the SRTs absorb the hit. Banks use the transactions to offload risk and improve capital ratios.

Sales of such type of credit transactions could be on track to reach record highs for a fifth year in a row. Issuance of SRTs is estimated to rise to a range of $30 billion to $35 billion in 2025, compared to around $29 billion last year, according to a report from Chorus Capital Management, one of the largest investors in such deals.

Among current transactions, Italy’s Banco BPM SpA is marketing two SRTs linked to loan portfolios worth about €4.5 billion in total, Bloomberg reported this month. Elsewhere, Vienna-based Bawag Group AG is said to be planning a deal linked to a portfolio of about €2.4 billion of loans, while Deutsche Bank AG is reaching out to investors for an SRT tied to around €2 billion of loans to German mid-cap companies, Bloomberg reported in December.

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