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LPC-Barings launches €161m-equiv loan portfolio sale
April 3, 2017 / 12:09 PM / 8 months ago

LPC-Barings launches €161m-equiv loan portfolio sale

LONDON, April 3 (Reuters) - A €161m-equivalent portfolio of loans from Barings has been put up for sale in Europe’s secondary loan market, banking sources said on Monday.

The sale is thought to be a redemption of a managed fund and is via a Bids Wanted in Competition (BWIC) process, with bids due by 2pm UK time on April 5, the sources said.

The BWIC has positions in 45 names, across a number of tranches and is denominated mainly in euros, with some dollars and sterling.

The portfolio has an average bid of 98.2% of face value. Broken down it has an average bid of 99.3% of face value on the euro loans, 93.9% of face value on the sterling loans and 92.7% of face value on the dollar loans, according to Thomson Reuters LPC data.

Barings was not immediately available to comment.

This is the latest BWIC to hit Europe’s secondary loan market recently after GSO brought two portfolios of loans totalling €176m last week.

BWICs are a popular way to sell paper as sellers can guarantee best price execution as the bidding process means buyers are most likely to put their best offer forward.

“People will bid aggressively as a BWIC prompts a competitive dynamic. The certainty of supply means people will not be scared of showing their best hand as they know the paper will be there if they give the best price overall,” a trader said.

The BWIC is expected to garner heightened interest from investors looking to put money to work, disenchanted with the barrage of repricings and refinancings in the primary loan market and attracted to the slightly softening secondary market.

Europe’s secondary loan market has softened over the last few weeks since average bids on Europe’s top40 leveraged loan composite reached an all-time high of 101.05 on March 7, TRLPC data shows.

Now is seen as a good time to sell, in case the market softens further. While paper may not be getting what it fetched at the peak, prices are still deemed to be high, sources said.

Had Barings BWIC been launched on March 7, it would have had an average bid of 99.4% of face value, 1.2 points higher than 98.2 on April 3, TRLPC data shows.

“The BWIC will is likely to get some attention from buyers but levels wont be at their recent highs,” a senior investor said.

The trader added: “There are sales happening in case more softening occurs in the market. People are definitely waiting in the wings if names continue to drop a point or so.”

Some of the larger positions include €9.5m of Irish food company Valeo Foods; €8.4m-equivalent of Belgian chemical distributor Azelis; US$7.3-equivalent of printing and packaging supplier Flint; €7.3m of chemicals company Platform Specialty ; and €6m of German sports pitch maker Sport Group.

Editing by Christopher Mangham

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