NPL&REO News

Balbec Taps Goldman for €800 Million Spanish Mortgage Bonds

Alternative asset manager Balbec Capital LP has hired Goldman Sachs Group Inc. to issue its first Spanish securitizations totaling about €800 million by bundling loans it bought in the country over the past few years, according to people with knowledge of the matter.

The US fund has bought up performing loan portfolios from Spanish banks over the last three years and now is seeking to finance them in the bond market, according to the people, who asked not to be named because the process is private. Balbec would seek to repackage the mortgage loans it purchased into securities of varying risk and size, they said. 

Some of the loans Balbec has bought in recent years came from banks such as Banco Sabadell SA and private equity firm Lone Star Funds, the people added, noting not all loans it purchased will make it into the residential mortgage-backed securities. The fund is looking to tap the market twice with a pair of RMBS transactions, each one for about €400 million, some of the people said.

Talks are continuing and details of the deals, including size, may change, people said. Balbec is likely to come to market in 2025, the people said, noting the deals will likely be split between the first and the second quarters.

The transaction comes as Europe’s asset-backed securities market sees renewed interest, with the European Investment Bank preparing to pump in more money once long-awaited reforms take hold. At the same time, the European Commission has sounded out the industry about a range of measures to make it easier for banks to offload loans to third-party investors. 

European Securitization

The market for securitization in Europe has almost halved since its peak of approximately €2 trillion during the 2008-2009 financial crisis, declining to €1.2 trillion at the end of 2023, according to a Commission document. That’s just a fraction of the size of the US market, which hit €13.7 trillion in 2021. 

Balbec has tapped the European market before, having issued an Irish RMBS backed by almost €700 million of non-performing mortgage loans in the country, according to a 2022 S&P Global Ratings report. In the US, the fund has been very active this year, with its latest RMBS transaction pricing in late November. Balbec has issued about 20 residential mortgage deals in 2024, according to data compiled by Bloomberg.

Spanish banks have been busy selling re-performing loans in recent years. These credits are usually included in the so-called Stage 2 European Central Bank classification, which means lenders must keep higher provisions for them. CaixaBank SA is in talks to sell a €500 million portfolio of these kinds of loans to Morgan Stanley and AB Carval Investors LP, Bloomberg reported.

Balbec manages more than $7 billion and has been active in the Spanish and Portuguese markets. Earlier this year, it bought a portfolio worth over €4 billion of soured Portuguese loans from Luxembourg-based LX Partners. And in 2023, Balbec secured roughly $465 million in commitments for its sixth flagship fund, which plans to invest in consumer, residential and commercial loan portfolios.

Original Story: Bloomberg | Author: Jorge Zuloaga and Carmen Arroyo
Edition: Prime Yield

Santander sells more than €330 million in NPL to Fortress

Santander has once again entered into an agreement with the Fortress Investment Group to divest itself of non-performing assets (NPL). The bank has placed around €330 million of unsecured loans and other financing operations with collateral in the so-called Swing project, according to market sources. The bank declined to comment.

This is the second transaction it has closed with Fortress in just a few months. At the beginning of the year it awarded the Churchill portfolio, with a gross nominal value of €200 million, while transferring the Newman portfolio to Balbec Capital, which in turn comprises real estate assets, secured loans and a portfolio of unsecured loans from Santander Consumer Finance.

With the Swing transaction now closed, Santander has disposed of more than €2,500 million of non-performing loans in gross volume in just over a year. The Bank also reorganised its contracts and positions with various servicers.

Original Story: Cinco Dias |Author: Eva Contreras
Edition and translation: Prime Yield

ServDebt hires Alantra to sell 1.35 billion euro bad debt portfolio

Servdebt, the Portuguese asset management and recovery company, has mandated Alantra to sell its own portfolio of non-performing loans (NPL) totalling €1.35 billion, reports Jornal Económico in its weekly edition.

In Portugal alone, the value of the NPL portfolio totalled €870 million euros. In Spain, the Portuguese servicer has put a portfolio of €480 million up for sale.

The NPL – Non-Performing Loans portfolio for sale by the company led by Ana Esteves and Bruno Carneiro is essentially (but not exclusively) unsecured.

The operation, which has been baptised the ‘Solaris Project’, is ServDebt’s own portfolio.

This is a secondary market operation that will compete with other NPL portfolios of large banks.

The value of the bad debt portfolios on the market totalled €2.2 billion, including ServDebt’s portfolio.

The banks CGD, Crédito Agrícola, Novobanco, Santander Totta, BCP, Banco Montepio and Bankinter/Universo have various types of bad debt portfolios for sale, totalling 1.32 billion.

Original Story: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield

Tribunal

Cerberus ordered to pay €358 million to Banco Sabadell for selling REO portfolios

The English courts ruled that the fund will have to pay this amount, plus 48 million in interest, for a transaction in the midst of the toxic ‘brick’ drain after the 2008 crisis.

The giant Cerberus will have to pay more than €400 million to Banco Sabadell for the sale of several portfolios of toxic assets in 2019. The English courts have ordered the US fund to pay €358 million for the operation, in addition to €48 million for interest and the costs of the process, the resolution of which was announced on December 3rd..

The origin of this process lies in the drainage of toxic brick that Spanish entities carried out after the real estate bubble of 2008. Specifically, in 2018, Sabadell opened a bidding process to sell several portfolios -Challenger, Coliseum and Rex- with a gross value of around €6,414 million.

The properties were awarded and transferred to Cerberus in 2019 in exchange for a consideration of around €3.5 billion, although it was agreed to defer up to 21% of the amount (around €600 million) over time. Some of the properties included in the portfolios were not registered in the property register because they were in the process of repossession or undergoing auction.

The institution chaired by Josep Oliu had a period of three years, until the end of 2022, to resolve this situation, although it was brought forward in the case of the assets grouped in the Coliseum portfolio. Cerberus paid the deferred payment associated with it, between 170 and 180 million, so that the amount still pending payment fell to around €400 million.

Subsequently, Banco Sabadell complied with the registrations in Challenger and Rex on a package of properties valued at 365 million (91.25% of the total) and this is where the conflict began. The fund refused to pay the total of the remainder, claiming that it had not registered all the assets and therefore did not have to pay anything. The entity sued Cerberus in January 2023 in the High Court of Justice in England; the trial took place in early November, and now the judgement has been handed down.

The court decision, which comes in the midst of BBVA’s takeover bid, will have a positive impact for Sabadell in terms of reducing NPLs (non-performing loans), reducing provisions and increasing coverage, which will translate into an improvement in asset quality and the bank’s risk profile, the impact of which will be reflected in the accounts and balance sheet for the fourth quarter of the year.

Original Story: El Mundo | Author: Maria Hernandéz
Edition and translation: Prime Yield

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