DebtX: European Loan Buyers Want Equal Access to Distressed Loans
European financial institutions are missing opportunities to sell distressed loans because the structure of most loan sales precludes many small- to mid-tier institutional investors from bidding, according to a survey of capital markets participants by DebtX.
DebtX’s poll of more than 50 firms with +ACYAIw-8364+ADs-150 billion of funds under management found that many investors would be active buyers of distressed European bank debt if loan sales were structured in smaller pools or allowed for the purchase of individual loans or small groups of loans.
European Distressed Loan Buyer Survey: Creating Liquidity for European Bank Debt highlighted five other key trends among European loan buyers.
“If Europe’s largest institutions can reduce the size of transactions, there will be more liquidity for European bank debt,” said DebtX CEO Kingsley Greenland. “European banks could accelerate their strategic goal of reducing NPLs and rebuilding their balance sheets.”
Investors also told DebtX that institutions selling distressed debt appear willing to sell only to the largest investors. They urged that the bidding process be more open and transparent. By offering loan sales that appeal to investors of all sizes, the study concluded there would be more bidders, more liquidity, and a greater opportunity to maximize the sale price of loans.
DebtX is a full-service loan sale advisor for commercial, consumer and specialty finance debt.