Secondary NPL Market

From Open Risk Manual


Secondary NPL Market is a Secondary Market for non-performing loans and other credit agreements that are not being fulfilled as has been contractually stipulated.


In a secondary NPL market third parties (the first and second parties being the original borrower and lender) are able to buy non-performing obligations.

Market Participants

Due to the sensitive nature of credit agreements, participants are typically subject to authorisation and supervision similarly to other sub-domains of the financial / credit system

Credit Sellers

  • Originating Banks
  • Other Financial Institutions granting credit
  • Other Business entities granting credit
  • Investment Funds

Credit Purchasers

  • Investment Funds
  • Other financial institutions

Issues and Challenges

  • Ensuring borrowers are not worse off following the transfer of their Credit Agreement
  • Transferability of bank’s claims to non-banks
  • Duty of care imposed on sellers and buyers of credit receivables[1]
  • Servicer Risk

See Also