Citibank won the bid for a portfolio of loans and bonds auctioned off by distressed debt firm Patriarch Partners last week, while Dresdner Bank is said to have sold a $500 million portfolio of distressed loans to Deutsche Bank. One trader said the Patriarch portfolio consisted of approximately $240 million of loans and $140 million of bonds, with a mixture of par and distressed names. Citibank will be the principal and will gradually reduce exposure to the names, the source said. It could not be determined how much Citi bid for the portfolio. Citi traders declined comment.
According to a market source, Patriarch was required to liquidate the portfolio after tripping the covenants on a CDO that it had taken over from another manager. The name of the portfolio could not be determined and Lynn Tilton, a partner and founding principal of Patriarch, was traveling and did not return calls by press time.
Tilton told LMW last year that Patriarch, which specializes in distressed loan CLOs, took over three deals called Amara 1 Finance, Amara-2 Finance and Oasis Collateralized High Income Portfolios-1 (LMW, 12/8) while last May it took over management of two CDOs from other managers. Market sources said J.P. Morgan was competing for the portfolio, but traders at the firm did not return calls by press time.
Reports also circulated that Dresdner sold $500 million of its loan portfolio to Deutsche Bank last Thursday. Dresdner established an Institutional Restructuring Unit (IRU) last year to sell off non-strategic loans to help restore the bank's profitability (5/19). Last December it stepped up the pace selling a mixture of par and distressed assets (12/15). A spokesman for the Dresdner IRU declined comment and Deutsche Bank officials declined comment.