Dresdner Bank has been aggressively liquidating its non-strategic loan portfolio through its Institutional Restructuring Unit (IRU), putting the bank ahead of schedule in its disposal of non-strategic loans. Traders said the bank has been selling off loans across the spectrum from distressed through to higher quality assets. Many of the loans sold fall into the energy and utility loan category, they said. Names recently sold include over $120 million of Mirant, $55 million of a Calpine Corp. construction finance facility and even some Charter Communications paper, traders noted.
Dresdner established the IRU to free risk capital for the Allianz Group, Dresdner's parent, and to help restore the bank's profitability. The unit is headed by Jan Eric Kvarnström. The overall non-strategic portfolio that the bank has defined is approximately E35 billion and by the end of September the bank had pared down the assets to approximately E24 billion, an IRU spokesman explained. This level is ahead of the firm's targets, he added, noting that the IRU had originally looked to sell down E10 billion by the end of next year. But Dresdner was given a mandate from its parent company to go ahead to be more aggressive with sales this year, the spokesman said. The non-strategic portfolio includes loans across the ratings spectrum and all regions are represented, he noted.
Last May, Dresdner completed its first portfolio offering with roughly $600 million of loans sold in an auction. The credits up for sale comprised five U.S. credits: W.R. Grace & Co., NRG Energy, WKI Holding's World Kitchen, Mandalay Resort Group and Wynn Resorts as well as a host of European names. The loans in the portfolio were priced anywhere from six cents on the dollar to par and the transaction was a collaborative effort between the par and distressed loan desks, said one market player (LMW, 5/19).