Business Irish

Wednesday 18 July 2018

PTSB holds fire on €2bn bad loan sale as US firm pulls out

Permanent TSB
Permanent TSB

Gretchen Friemann

Permanent TSB has pushed back the final bid deadline for its €2.2bn sale of impaired mortgages to July 26 as speculation intensifies about one of the main contenders for the assets.

According to sources, Cerberus, the US private equity firm which recently snapped up a portfolio of soured commercial loans from AIB, has exited the race leaving Lone Star and Goldman Sachs among the heavyweights still in contention.

PTSB's decision to delay by a week the submission of last round offers on Project Glas, as the portfolio sale has been dubbed, comes as Ulster Bank sets August 3 as the deadline for final offers on its auction of a €1.6bn bundle of distressed residential mortgages.

The UK-owned lender ushered bidders through to the next round of the process the same week as the bank's executives appeared before an Oireachtas Finance Committee.

Goldman Sachs, Lone Star, Cerberus and Oaktree are all thought to have participated in the first phase of Ulster bank's loan portfolio sale, known as Project Scariff.

However it is understood a number of high-profile names have retreated from Project Glas, which is sub-divided into two separate portfolios: Project Tibet, which houses mortgages attached to private dwelling homes in deep arrears, and Project Nepal, which is comprised of troubled buy-to-let loans.

The PTSB deal equates to 11pc of the bank's entire loan book and its successful conclusion will mark a major milestone in the lender's efforts to clean up its balance sheet amid pressure from the European Central Bank on European lenders to decisively tackle crisis-era assets.

Sources said a UK or US hedge fund is vying for the PTSB loans, which may attract a higher-than-anticipated price with part of the portfolio likely to be carved off for a securitisation.

This means that the mortgages will be re-packaged into bond-like instruments so the income stream can be sold down to debt capital market investors. The securitisation of non-conforming or risky home loans has rocketed since the crisis, although the market's size still remains some distance from its pre-crisis days.

US hedge fund, Elliott, which has ramped up its activities in Europe recently, waded into the Danske race for a €1.8bn portfolio of performing, but low-margin home loans. Goldman Sachs and Pimco prevailed in that contest and immediately securitised the book.

When asked about the remaining contenders for Project Glas, a spokesperson for Permanent TSB declined to comment.

A representative for Cerberus was unavailable.

Irish Independent

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