LONDON, Sept 26 (Reuters) - Bids are due on two portfolios of loans totalling €365m from CQS and ICG in Europe’s secondary loan market as sellers tap into investor liquidity to get best execution on portfolio credits and free up space to invest in new deals, banking sources said.
CQS is selling a €200m portfolio of loans via a Bids Wanted In Competition (BWIC) process and bids are due on September 26, the sources said.
The BWIC comprises 50 names and has an average bid of 99.5 percent of face value, according to Thomson Reuters LPC data.
Some of the larger positions include €8.5m of Dutch ports services company HES Beheer; €8.5m German measuring technology group Schenck Process; €8.1m of German publisher Springer; €8.3m of French loan insurance broker CEP; €7m of German rehabilitation clinics group Median Kliniken; €7m of UK cinema operator; and €7m of Italian telecom firm Wind.
Elsewhere ICG is selling a €165m portfolio via a BWIC, comprising 26 names across a number of tranches and bids are due by September 27, the sources said.
ICG’s portfolio has an average bid of 99.04 percent of face value, TRLPC data shows.
Some of the larger positions include €13.4m of Swiss medical diagnostics company Unilabs; €12.6m of Danish packaging group Faerch Group; €11.2m of Premier Lotteries Ireland; £11m of UK healthcare firm ICS; and €10m of French veterinary pharmaceuticals firm Ceva.
CQS and ICG were not immediately available to comment.
BWICs have been a popular way for a number of investors to offload paper in an effort to free up cash that can then be invested in new deals in the buoyant primary market.
The auction process is an attractive way for sellers to exit positions as they capture a lot of attention from traders and investors who tend to put their highest offers out there in an attempt to outbid the competition.
While BWIC sellers are currently competing with an extremely busy primary market, they are hoping cash rich investors will be attracted to buying chunky positions in credits which may not be easily available to buy outside of a BWIC process.
Some of the paper being sold is also attractive as it has higher yields and better documentation than new paper being offered in the primary market.
Sellers are also opting to sell before a perceived softening of the secondary market as it gets flooded with new paper as deals from primary close and free to trade.
“Maybe the funds want to clear out names to make room for primary or make the most of secondary before it gets impacted by a load of primary deals allocating. In three weeks time people may have more time for secondary but it could be a softer market. Secondary is strong right now so why not make most it,” a trader said. (Editing by Christopher Mangham)