Avida Finans, the Swedish lender owned by KKR, has completed its first significant risk transfer transaction, selling the deal to credit firm Sona Asset Management as it works to strengthen its balance sheet, according to sources cited by Bloomberg.

The SRT references a SEK 2.8bn ($297m) portfolio of consumer loans and enables Avida to offload about SEK 1.8bn of risk-weighted assets. The transaction forms part of a broader turnaround strategy that has included an equity injection and headcount reductions.

Chief financial officer Lennart Erlandson said the lender would review the SRT’s performance before considering additional transactions. “As this is our first SRT we have learned a lot during the process and regarding the question on a continuation we need to evaluate this transaction first,” he said.

SRTs allow lenders to insure loan portfolios against default by issuing credit-linked notes to institutional investors such as pension funds, sovereign wealth funds, and hedge funds. The structure helps banks lower capital requirements and improve solvency ratios.

Revel Partners and White & Case advised Avida on the deal, which was first announced in August. Sona declined to comment.

Avida posted a SEK 5.8m profit in the third quarter, reversing a SEK 54.2m loss a year earlier.

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