J.P. Morgan bid ahead of the field to win a $290 million loan portfolio that was auctioned off by bank loan heavyweight TCW last Thursday. The cover bid was 100.76, said a trader. The portfolio contains approximately 260 names and was also bid on by Banc of America Securities, Citigroup and Credit Suisse First Boston. A J.P. Morgan banker confirmed the desk won an auction, but declined further comment. A TCW official also declined comment.
A buyside trader explained that TCW was selling off a portfolio from an old KZH deal that is winding down in December. He explained that the equity investors have the ability to call the structure and wanted to cash out while levels were very advantageous. "You have to understand when it was originated six or seven years ago, [the KZH structures] were very inefficient," he said.
As first reported on LMW's Web site last week, the portfolio contained approximately $20 million worth of revolvers, one distressed name and a lot paper that trades at a significant premium, said traders. This allayed fears that TCW may have had that auctioning off the deal could lead to replication. TCW's senior loan and bank debt group has approximately $3.6 billion in assets under management, all of which is held within structured vehicles. Mark Gold is the head of the group and senior portfolio manager.