Foreign investors chase Spanish ‘bad loans’
Foreign investors are scrambling to buy Spanish banks’ bad loans in the latest sign that the health of the eurozone economy is improving. Sareb, Spain’s so-called "bad bank," has attracted 30 offers for a €300m portfolio of non-performing residential mortgages, according to people with knowledge of the matter. The portfolio, dubbed Abacus, is the first bundle of loans Sareb is selling since being established earlier this year by the government to dispose of €50bn of toxic banking assets. Bidders include US private equity groups Lone Star, Apollo, Cerberus, Centerbridge and Fortress. Sareb, headed by Belén Romana García, expects to close a deal before the end of the year, the people said. Separately, a €650m portfolio of distressed consumer loans and credit card debt being sold by Banco Sabadell has received more than 40 offers from investment funds, which it had narrowed down to 30, people close to the process said. The disposals by Sareb and Sabadell are just a fraction of the €7bn to €10bn of underperforming loans being marketed in Spain. Sareb and Sabadell declined to comment. "There’s an awful lot of interest in Spain at the moment," said a loan portfolio adviser involved in some of the transactions. This pick up in loan sales comes as Bill Gates, the founder of Microsoft and one of the world’s richest men, made a €113.5m investment in Spanish construction group FCC on Tuesday. The move was described by Spain’s industrial minister José Manuel Soria as a sign of "greater confidence and credibility". Investor appetite for Spain is mounting because the economy is showing signs it has stabilised after two years of recession. Gross domestic product rose 0.1 per cent in the third quarter after nine consecutive quarters of decline. US private equity groups are beefing up their teams in anticipation of a much-awaited bank asset sell-off. With a combined $90bn of cash to be spent on distressed loans from lenders across Europe, they have had to wait longer than planned because banks could not afford to crystallise the implied losses if they sold their worst assets. The creation of Sareb is expected to boost disposals. "We are beginning to see private equity groups who did not have an office in Spain hiring Spanish people and opening offices in Spain," said Alejandro Ortiz, a partner at Linklaters in Spain. About €9bn of loans have been sold this year in Spain, the same amount for the whole of last year, and up from less than €1bn in 2010, according to PwC estimates.