Banking and Credit Weekly Bulletin | 28 October 2020

Banking – FT report that private lending funds receives attention from large asset managers as the market is considered less saturated in contrast to public debt markets (Financial Times)

• According to data gathered by Prequin and the Financial Times, asset managers were pitching 520 private credit funds to investors in October. Up from 436 in January and 400 in January 2019
• Firms like Goldman Sachs and Oaktree currently raising additional funding for their credit funds

Banking M&A – ECB policymaker encourages cross-border mergers in the European banking system to help diversify banks (Reuters)

• ECB’s De Cos highlights how larger customer bases could help alleviate some of the burden of technological investment and improve banks profitability

Banking – Loan quality worsen around Europe as stage 2 loans surge in the first half of 2020  (Debtwire)

• The effects of the pandemic have hit EEA countries as Stage 2 loans have risen to 8.17% of total at the end of the first half of 2020 compared to 6.78% at the end of 2019.
• In the same time-frame, stage 3 loans (or impaired) increased only slightly, from 3.11% to 3.42%

M&A – Lone Star Europe set to acquire McCarthy & Stone (Debtwire)

• Lone Star Europe has agreed to acquire the UK-based developer and manager of retirement communities McCarthy & Stone for a cash offer of 115 pence per share
• This implies a valuation of c. £630m

Loan sale – Bids were due on 21/10 for UKAR’s performing mortgage portfolio (Debtwire)

• The portfolio, called Project Jupiter, is worth £5bn
• The bidding entities were Cerberus, PIMCO, and Davidson Kempner
• The investors were asked to resubmit their offers after the March sale was put on hold due to COVID-19

Regulatory – FCA is urging borrowers in payment difficulty to seek advice and support from their banks and government-backed bodies (Financial Times)

• The FCA is also emphasising that it has asked banks to offer options to borrowers after 31 October when the three-month moratorium period ends
• FCA’s post-October support measures include guidance for banks on how they should offer mortgage borrowers a range of tailored repayment options and restructurings

Loan Sale  – PTSB sells €1.2bn performing BTL loan portfolio to Citibank (Debtwire, Irish Times)

• Citibank intends to securitise the c. 3,700 predominantly interest only BTL loan accounts that have an average balance of €375k.
• The transaction will increase PTSB’s transitional Total Capital Ratio by 2.1% and increase its NPL ratio from 7.0% to 7.7%, while CEO, Eamonn Crowley has said that focus remains on executing bank strategy rather than a merger with Ulster Bank

Banking – Loanitt raises €570k in new funding from Enterprise Ireland and Halo Business Angel Network (Irish Times)

• The financial intermediary business provides auto, agricultural & commercial finance in a streamlined manner through the use of their technology

ABS – First Citizen expected to price third Irish Auto Loan ABS next week (Debtwire)

• Citizen Irish Loan Receivables Trust 2020 is expected to comprise of 13,335 loans with an aggregate balance of €171.2m and a W.A. LTV of 76.4%

Loan sale – Pipeline in the Italian NPE market (Debtwire, Debtwire)

• UniCredit has announced the sale of an Italian SME secured NPLs portfolio dubbed Project New York (total gross claim value of c. €692m) to a securitisation vehicle managed by illimity Bank
• Crédit Agricole Italia is selling €320m secured Italian NPLs portfolio (dubbed Project Sparta) that had been originated by Cariparma according to a person familiar with the matter
• Credit Agricole Italia has put on hold the sale of €1bn UTP portfolio that had launched this spring

Loan sale – Italy raised €8bn through 30-year bond sale last week, securing the country’s second-lowest borrowing cost to date (Financial Times)

• Italy’s treasury received orders for more than €90bn for the 1.76% yielding bond
• The oversubscribed bond sale came only 2 days after the EU new SURE programme sale and reemphases the strong investor demand for eurozone debt

Regulatory – Alpha Bank applies for the Hercules Asset Protection Scheme regarding Galaxy IV, the third NPL securitisation of the Galaxy transaction (Athex Group)

• The application concerns the provision of a guarantee by the Greek State for the senior notes of Galaxy IV with a total value of €650m

Regulatory – New insolvency law passed in the Greek Parliament (Capital)

• The new regulation is anticipated to help banks reduce NPLs

Loan sale – NPLs rise for first time in years due to COVID-19 – Debtwire European NPLs 3Q20 Report (Debtwire)

• The Spanish NPL market was hit hard by the COVID-19 crisis. After a strict lockdown imposed in March, most NPL sales were put on hold. Just €2.4bn worth of deals have closed so far this year. Still, in recent months, banks have started to move ahead with sales and there are several portfolios on the market for a total volume of c. €10bn

Real estate – Aquila Capital invests €180m in the largest residential project of 2020 (Brainsre.news)

• AQ Urban Sky will build 450 homes in two 30-floor towers overlooking the historic centre of Málaga, making them the tallest residential towers in Andalusia

Real estate – Pryconsa closes its first Build-to-Rent operation with a DWS fund (Brainsre.news)

• Pryconsa has entered into an agreement with a fund managed by DWS’s property division, whereby it will promote a 180-house-project in Marid, for rent purposes

Real estate – Tikehau Capital to analyse potential purchases in Spain amounting c. €1bn (El Economista)

• French asset manager maintains its appetite for the Spanish property market despite COVID-19 with several transactions expected to be closed by end of the year

Loan Sale – Novo Banco launches a €100m mixed NPL portfolio (Debtwire)

• After the rumours of launching Project Nata 3 during this year, the bank decided to launch a smaller portfolio composed mainly by consumers exposures

Loan Sale – Bidders submitted indicative offers for both Millennium bcp’s portfolios on October 26^th (Debtwire)

• Binding phases for both projects, Webb and Ellis, are expected to start on the week commencing of November 2^nd

Loan Sale – Project Zip moves to biding phase with Cerberus, Albatross and Tikehau as final bidders (Debtwire)

• According to familiar sources to the deal there were selected three bidders for the bidding phase

ABS – Dutch mortgage lender Tulp Hypotheken began roadshow this week for RMBS backed by owner-occupied residential mortgage loans (Debtwire)

Argentina – Regulatory News – Government announces measures to streamline regional capital markets and relieve pressure from foreign exchange markets (Reuters)

• Government intends to reduce obstacles to the commercialization of assets
• It also tendered for a $750m bond that was set up for investment funds which are overexposed to the devalued local ARN currency