April 2012

Seven of our colleagues in Dechert’s active CLO group represented the firm at the first annual IMN CLO and Leveraged Loan Conference in New York a few weeks ago. Strong interest in the collateralized loan obligation technology meant a capacity crowd of more than 750 managers, arrangers and investors, often leaving panel discussions with standing room only.

As participants reviewed CLO performance over the past five years, the theme emerged that CLOs weathered the crisis well compared to other structured finance vehicles. The CLO technology performed as advertised: protecting senior investors and amortizing senior notes during periods when coverage tests triggered.Continue Reading First Annual IMN CLO and Leveraged Loan Conference Update

For the last few weeks, I’ve been writing about investing in distressed bank assets, with a particular focus on the European markets. As you know, we think there are huge opportunities as the European banks disintermediate to meet capital thresholds, while the economy in Europe grinds slower and slower. Last week in this blog we talked about considerations on the sell side. Now, near and dear to my heart; the buy side.

First, we can start by thinking about everything said in last week’s article on the sell side and turn it over and look at it from the buy side. The asset pools will continue to be heterodox. The collateral, the loan documents, the economic terms of the loans will all be heterodox. Notwithstanding my plea to the sell side to get their house in order before pools are exposed to the marketplace, you should anticipate that pools will not be cleaned up for prime time before being exposed for sale. Files and data tapes will be incomplete and will be corrupt, documents will be missing, and underwriting information will be woefully hard to come by.

That’s what it is, get over it. We play the cards we’ve been dealt and we bid on what we got.Continue Reading The European Bank De-Risking Continued: The Buy Side

Last month three of our colleagues attended the Distressed Debt Conference sponsored by CREFC at the New York Athletic Club. Since the topics of distressed debt and loan sales are frequently covered by CrunchedCredit, we thought an update on this conference was worth providing. For those of us not in the New York office, travelling to NYC is always an excellent opportunity to catch up with clients and colleagues. Given that we were talking about distressed debt and there is a lot more of it than there used to be, it was a welcomed change to see that the mood of the conference was very upbeat, and that there was general enthusiasm about the numerous opportunities available in the distressed debt market. Continue Reading CREFC Distressed Debt Conference Update

Sometimes a bank just has to sell assets. For many banks confronting capital shortfalls, this is one of those times. Last week, we wrote generally about the "Investing in Distressed Bank Assets Conference" in London. Great conference. Marquee headline: EU Banks Will Sell Risky Assets. Time for a deeper dive into issues confronted by the sellers. 

So, if you want to sell a big pile of assets (steaming or otherwise), what do you do? You can certainly hire one of the well-known brokers (er, I mean loan sale advisors) in the market and tell them to have their way with you. They will do some level of loan file organization; produce some type of tape; produce a book (pretty pictures); and set up a war room. They will run a public auction process. They will jawbone the bidders.  Do they do a really good job? Read on. Is this the only option? No.Continue Reading Time to Sell the Silver