Morgan Stanley won an auction of approximately $500 million of par loans last week. The portfolio was auctioned off by a Los Angeles-based fund manager that invests in collateralized loan obligations, according to sources familiar with the trade.
The cover bid for the loan portfolio was 101.01, according to traders. One trader speculated the winning bid was 101 1/4. The runner up was Credit Suisse First Boston. Another trader said he was surprised the loans were bid at such a high premium. Loan portfolio trades have typically been in the $100-$300 million range. "It is one of the more sizeable deals we have seen," he said. "Given all the new issue in the market, I am surprised it got a good premium." A Morgan Stanley spokesman confirmed the bank had won the portfolio, but would not comment further.