By Zaina Espana
The low secondary loan prices reflect heavy forced selling by stressed investors that has also weighed on the battered LevX index of leveraged loan credit default swaps.
Around three billion euros of forced sales have flooded the thin and illiquid European secondary loan market in the last two weeks, several traders said.
The sales started with Icelandic banks’ portfolio sales and other European banks followed, but a portfolio sale from Sankaty last week marked a new phase of the selloff as managers of credit-driven collateralised loan obligation (CLO) vehicles started to throw in the towel, traders said.
Traders said Sankaty, the credit affiliate of private equity firm Bain Capital, put a $342 million portfolio of leveraged loans up for sale last Wednesday and fund manager Highland Capital followed in the United States with a $641 million portfolio of U.S. and European names.
Average bids on Europe’s top 40 leveraged loans have lost 225 basis points from last Friday’s level of 71.01 percent of face value to 68.76 on Monday, RLPC data shows.
While this madness continues, watch for results due out soon:
By Christian Vits
(Bloomberg)- The European Central Bank offered banks unlimited amounts of dollars in two new tenders today as it steps up efforts to get financial institutions lending to each other again.
The Frankfurt-based central bank offered banks funds for 28 days via a currency swap in which it lends dollars against euros. In a separate tender with the same maturity, the ECB offered dollars against collateral at a fixed rate of 2.11 percent. In both cases it will fill all bids. Results will be published at 11 a.m. The loans start on Oct. 23 and mature Nov. 20.