Credit Suisse and Deutsche Bank were the winners of two loan portfolios in auction last week. CS won a $294 million portfolio, while Deutsche Bank bagged one for $100 million. The cover bid on the larger portfolio was 100.36. The cover bid on the portfolio Deutsche Bank won was 100.32. The sellers of both portfolios are large loan managers, according to a trader. Their identity could not be determined by press time.
The larger portfolio consists of names with an average coupon of LIBOR plus 3%, according to a trader. Another said it consists of mostly par loans and includes names such as Toys 'R Us, RH Donnelly, Eastman Kodak and Allied Waste. He added that it contains some names that were in work-out but are now trading around par. Five dealers bid for the portfolio, he said.
Another trader said the average coupon on the smaller portfolio is LIBOR plus 240 basis points and also contains mostly par loans. A third $118 million loan portfolio was also auctioned off last Thursday. Details of the auction could not be determined by press time. One trader commented how unusual it was for so many auctions to happen in a single week, adding that he would have expected demand for portfolios to be low because loans are trading a point lower compared to a few months ago. Another trader said it is just coincidence that three portfolio auctions happened in the same week.