Blackstone Creates Europe’s First Restructured Loan Securitisation Fund

4 October 2016 – Expansión

The US giant Blackstone is doing great business in Spain with the problem assets that it bought from Catalunya Banc at the beginning of 2015. And it is now going to set the cat amongst the pigeons with an operation that looks set to represent a golden solution for its competitors and Spain’s banks in general.

The firm has just created the first securitisation fund in Europe from restructured loans. It is a pilot test, involving €265 million of credits, but it will likely open the way for other Spanish entities to dispose of the majority of their problematic loans without having to sell them to vulture funds at knockdown prices.

Blackstone completed the purchase of Catalunya Banc’s problematic mortgage portfolio for almost €3,600 million in April 2015 – the portfolio had a nominal value of more than €6,000 million – that sale was a condition for BBVA to acquire the Catalan group. The purchase was structured through a fund to which Blackstone contributed €3,598.4 million and the FROB the remaining €524.9 million.

The well trodden path

Now Blackstone, which has spent almost a year “negotiating” with the CNMV to obtain approval for this operation’s prospectus, is selling these mortgages to qualifying investors through a traditional securitisation fund, like the ones created in Spain to finance the credit boom until the outbreak of the financial crisis, but with the difference, given that this time the fund involves restructured loans. In other words, it contains credits whose conditions have been altered to allow the borrowers to afford the repayments.

Financial sources explain that, rather than discounts of 70%, such as those being applied to the direct sale of portfolios through bilateral contracts between entities and the funds who are active in this niche of the market – such as Apollo, Lone Star and Centerbridge, as well as Blackstone – these mortgages may now be placed on the market with discounts of less than 10% for the most subordinated (higher risk) tranches.

Nevertheless, these portfolios contain loans that borrowers have been repaying for more than 37 months without any help, thanks to the economic recovery, in other words, they contain “high quality” problem loans. In total, they will generate returns of more than 100 basis points above Euibor and so represent an interesting alternative for investors looking to take on more risk in the almost-zero interest rate environment.

Original story: Expansión (by Daniel Badía)

Translation: Carmel Drake

The Bank Makes Credits Easier And Mortgages Cheaper

1 September 2015 – Expansión

FINANCING/ Institutions relax control over granting consumer credit. The price of mortgage loans goes down, although the criteria for getting approval remain unchanged.

Consumer credit has become a key pillar in the growth strategy of financial institutions. In an environment of interest rates at historic lows in which bringing in profitability gets important to sustain balance, the bank makes the criteria for granting credits for consumption and other purposes more flexible.

As follows from the Bank Lending Survey of July, coordinated by the Bank of Spain, which reflects opinions of 10 financial institutions, “in the segment of household loans for consumption and other purposes, approval criteria relaxed slightly between April and June 2015, mainly due to the increased competition and improving economic prospects. “It is the first time since the first quarter of 2014 that the conditions are smoothed out”, says the report regulator. “The standards for approval of loans for home purchases remained unchanged in Spain, while in the euro area they were lessened.”

The institution led by José María Linde makes its assessment: “The improved economic expectations could have induced less restrictive criteria [in the granting of mortgages], but its variation would not have been sufficient for institutions to change their credit policy.”


Still, the Spanish mortgage market is leading a sustainable recovery and housing sales increased by 26.3% in June YoY, according to the National Statistics Institute (Instituto Nacional de Estadistica, INE) (see page 16). And, although risk controls to approve mortgage loans do not loosen, it is a fact that competition has resulted in cheaper loans with interest rates of about 1.5% over Euribor (see the chart).

This price reduction is precisely one of the factors that make consumer credit a key product for the improvement of profitability of banks. “As institutions/authorities we need to improve margins and consumer credit is much more interesting than the mortgage. While the former applies  average interest rates of 8%, mortgages are being granted 200 points over Euribor, “says Enrique Barbero,of Ibercaja.

The new family credit operations continue to rise, with a growth of 37,6% YoY accumulated in the seven months of the year, equivalent to 60,978 million, according to the Bank of Spain data collected by BBVA Research. Of these, 26,817 million were for mortgage operations, 16,441million for consumer credit and 17,720 for other purposes. Moreover, if compared with the same month of 2014, data from last July showed increase in new operations exceeding 62%, with more than 9,000 million in loans granted to the households. “This is clearly a positive trend,” concludes BBVA.

Original story: Expansión

Translation: Lee La

NPL Ratio Falls For Third Consecutive Month To Reach 12.77%

19 January 2015 – Expansión

The NPL ratio of Spanish banks decreased by 17 basis points in November, to reach 12.77%, its lowest level since September 2013.

The default rate declines in November, for the third consecutive month. The NPL ratio of banks, cajas, credit cooperatives and other financial entities dropped by 17 basis points to reach its lowest level since September 2013. The default rate of the sector as a whole, including companies such as the ICO (Official Credit Institute), amounted to 12.75%.

Doubtful assets decreased during the month by €2,115 million to reach €175,192 million, representing a reduction of 8.2% with respect to November 2013.

There was also good news on the credit side, which recorded a month-on-month rise of €6,014 million, although it was still down by 5.6% year-on-year. We have not seen a lower rate of decline since August 2012, which indicates that the “closed credit tap” is gradually starting to open.

The default rate in the banking sector peaked in December 2013, when it reached 13.689%. Last October, it fell below 13% for the first time since then. Experts and banks predict that the downward trend will intensify this year, although they point out that, whilst credit balances continue to fall, the reduction in doubtful assets will be transferred more slowly to the NPL ratio.

Original story: Expansión (by M. Romani)

Translation: Carmel Drake

Cost of Loans to SMEs, Homebuyers In Its Four-Year Lows

12/01/2015 – El Economista

Spanish banks’ race for capturing clients has caused the loan prices to plummet in the last four years. The annual percentage rate (APR) for new mortgages stood at 2.859%, at 4.399% for SMEs and at 2.396% for over-a-million companies in November.

We should take a look back at the December 2010 figures to find lower rates. High competitiveness has pushed banks to reduce their interests by 0.50% since January 2014, and by 1.148% in the particular case of SMEs. With the rates hitting the bottom, the entities have to focus on loan volume to obtain profits.

The armistice imposed by Spain’s Central Bank allowed the entities to save up to €8.1 billion from January to September, equivalent to 27.03% of the financial costs.

Once deposits hit the rock-bottom, the savings scheme will have to be shifted upon credits, experts say.

The only vetoed destiny for the liquidity is the real estate world. And still, it has become the battlefield for the credit war. On Thursday, Kutxabank blew the market with a mortgage offer with 1% spread over the Euribor which took the first place in the current ‘cheap loan for house purchase’ ranking. Banco Santander and ING Direct position just behind it with their 1.69% spread. Farther on we find BBVA and Popular (1.80%), Sabadell (1.70%) and other entities like Liberbank (1.54%). Only a year ago, common spreads were of 2.5%, or even 3%.

In absolute terms, the prices are painfully low as the benchmark, the Euribor, also posts record-low. In November, it showed 0.335%, meaning an average spread of 2.524%. To compare, during the real estate boom 0.5% (or even 0.25% for best customers) spreads were no novelty.

Precisely, present offer is addressed to customers earning at least 1.000 to 2.500 euros and it involves all types of loyalty products (insurances, pension schemes, minimum credit/debit card spending). There is still some margin to fight with, both in loan prices and conditions, but relaxing them even more would mean higher risk and rejecting certain profits, while the industry faces the challenge of raising them instead.


Original story: El Economista (by E. Contreras)

Translation: AURA REE

Sareb Sheds Portfolios Worth Over €1 Bn In December

12/01/2015 – Cinco Dias

Sareb, Spain’s bad bank, took a good advantage of every day of the rest of 2014 and sealed some significant deals amounting to more than €1 billion.

According to a statement released by Sareb Friday, on December 31st it signed a transfer agreement on 39 non-performing, secured loans, known as portfolio ‘Aneto‘. Their par value was of €237 million and they were acquired by international investment tycoon Blackstone. KPMG and Ashurst advised on the transaction.

The portfolio is secured with 29 residential housing developments and plots situated mainly in the Valencian Community, Madrid and Galicia regions.

In parallel, the company chaired by Belen Romana (pictured) agreed to sell an office building housing Gallina Blanca in Plaza Europa Square, Barcelona, to Colonial.

The property of 4.869 square meters of office space and 68 parking spaces was acquired for a total of €10.4 million, in assistance of Aguirre Newman and Anticipa.

“The sales prove the bad bank is a dynamically operating business and its assets are popular in the market”, Sareb’s CEO Jaime Echegoyen pointed out.

“The deals reassure that the entity successfully fulfills the role given to it”, he added.

Sareb has said good-bye to the year 2014 by sealing several loan and property portfolios valued at over €1 billion. The deals include Project Agatha (a loan and real estate portfolio worth €259 million), Meridian (a €133 million loan package), Olivia (loans valued at €140 million) and Kaplan (loans to small and medium-sized developers of a par value of €234 million).

In the last weeks of 2014, Sareb has sold four office buildings included in the Banking Asset Fund ‘Corona’ for €81 million, it declared in a statement.


Original story: Cinco Días (by J. P. C.)

Translation: AURA REE

Riofisa In Talks With Creditors On €400 Mn Debt

12/01/2014 – Expansion

The shopping mall king Riofisa has filed for pre-arrangements with creditors as its debt reached €400 million.

The company, formerly belonging to Asentia – the old ‘bad bank’ of Colonial – is presently controlled by Eneas and Mainspring.

Riofisa has four months to negotiate with the lenders and agree upon a payment scheme. Currently, the group owns the Plaza de Armas (Sevilla), the Vialia (Salamanca) and the Aqua Magica (Palma de Mallorca) retail parks. The last is found under construction (the project pictured).


Original story: Expansión

Translation: AURA REE

Cerberus, Oaktree, Orion Strike Barcelona’s Hotel Arts’s Debt

9/01/2015 – El Economista

Funds Cerberus, Oaktree and Orion represent three out of four bidding finalists who are one step closer to lucrative Project Gaudi. This €740 million portfolio includes 18 loans with tempting collateral properties, among which the Hotel Arts, situated on Barcelona’s coast, immediately catches eyes of investors.

The credit package was up for sale in October by German bad bank FMS Wertmanagement.

The best bids oscillate around €450 million, meaning that the bidders assume a risk of default which suggests a 40% discount on the loans’ face value.

Apart from the Hotel Arts (pictured on the left), the deal includes such gems as the high-end Penha Longa Hotel & Resort in Cascais (Portugal), owned by a fund of Deutsche Bank.

Moreover, the portfolio consists of five shopping and leisure centers and four business parks in Madrid and Barcelona. Likewise, debt of Bluespace’s 17 storage spaces in Madrid, Barcelona and Valencia is at stake. In 2007, the German entity approved €125 milion in loans for their development.

Of the 18 credits making the Project Gaudi, there are 6 performing, 6 sub-performing and 6 totally non-performing loans.

This is not the first time a German entity decided to shed Spain-related real estate exposure. Last year, Commerzbank transferred huge Project Octopus worth €4.5 billion granted by its Spanish branch to U.S. fund Lone Star allied with JPMorgan.

In turn, Sareb has also sealed several NPL portfolio sales, like Project Pamela (€200 million worth) or Agatha (€260 million).

“Altogether, receivable and defaulting loan transactions amounted to €16 billion in 2014”, assured Patricio Palomar, Alternative Investment head at CBRE.

The Volume to Boost More

“We expect that this year will bring greater figures as many debt refinancing operations and sales are scheduled throughout”, Mr Palomar said.

“Such types of packages will be poached by foreign funds and insurance companies which are already forging vehicles to invest in assets through debt or by financing property developent and rehabilitation projects”, the executive added. To give a few of examples, such is the strategy of Prudential, Alliance and AXA. The last has established a fund called CRES with over €5 billion to spend on real estate across Europe.


Original story: El Economista (by Alba Brualla)

Translation: AURA REE

Sareb Transfers €250 Mn “Aneto” NPL Portfolio to Blackstone

9/01/2015 – Expansion

Blackstone has snapped up one of the last portfolios sold by the bad bank of Spain, Sareb. The U.S. investment tycoon has outbidded Goldman Sachs in the auction of “Project Aneto, composed of loans granted for housing developments and land worth nearly €250 million.

Conducted by KPMG, the bidding invoked huge interest among international funds. The sale included 39 non-performing loans of a face value of €237 million, backed by 29 property developments and land ready for construction. The assets are located mainly in the Valencian Community, Madrid and Galicia.

According to information provided to the investors, originally “Project Aneto” also comprised outstanding loans which finally were left out of the deal.

This way, Blackstone vies for defaulting loans which allow it to get the collateral properties in exchange for debt forgiveness agreed upon with developers.

The deal confirms strong bet of the U.S. fund on the Spanish property market. In 2013, Blackstone acquired a package of subsidized homes from the Community of Madrid, and last year it bought-out the servicer of Catalunya Banc, together with its soured mortgage loans, for €3.6 billion.


Original story: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Kutxabank Crushes Mortgage Market With 1% Spread

9/01/2015 – Expansion

The new year revives fierce competition on the mortgage market. Kutxabank announced yesterday it had lowered its spread to 1% over the Euribor.

The good deal becomes available after taking out all kinds of insurances (home, life, car) and payment cards, salary deposit and a pension scheme. Unlike other attractive mortgages found presently in the market, this loan finances only 75% of the property’s value, and not 80%.

Sources from the entity explained that although Kutxabank introduced many novelties in its mortgage offer last year, this move was made to enhance access to home-purchase financing. In fact, the bank discounted some requirements so that the young under 35 could enjoy the low rate.

Furthermore, minimum household income shall amount to 3.000 euros. Shopping paid by cards shall equal to at least €3.600 annually. Pension scheme translates into paying a minimum of €2.000 annually.

Santander and ING are the entity’s main competitors with their Euribor + 1.69% spreads.


Original story: Expansión (by M. R.)

Translation: AURA REE

Santander Adds Fuel to Mortgage War Driving Differential Down to 1.69%

7/01/2015 – Expansion

At the beginning of 2015, Santander once again stokes the mortgage war as it did a year earlier at this time when the attractive loan offer was scarce, with the real estate market and economy picking up from the ash. The entity improved conditions of its best mortgage loan for home purchase but still, the accessibility path to it is bristled with multiple loyalty products.

Over the last year, Spanish banks have reduced their margins by a half percentage point over the Euribor which showed 0.32% Monday. Thereby, the 2015 forecasts made by the industry are coming true and the new year is set to be troublesome to the banks. Their revenues will be pushed down by low interest rates, small business volume and a fierce competition in capturing solvent customers, causing their spreads to narrow.

The Conditions

The new mortgage of Santander, available by June 30th, allows a 2.45% interest rate for the first year, and a 1.69% rate for the remaining lifetime of the credit. Until now, the bank offered 2.85% and 1.89% ratios respectively. No opening fees are charged and the loan covers 80% of a property’s appraisal value. First-time buyers may enjoy a 30-year term to pay their credit off.

Basically, there are four requirements to be met when applying for the low-interest rate mortgage. Firstly, salaries of the loan holders shall amount to 2000 euros per month. Secondly, three bills shall be deposited each quarter. Thirdly, credit/debit card of Santander shall be used at least three times per quarter. And finally, one shall take out home and life insurances.

The entity has a gross 48 billion euro loan portfolio made up of mortgages to Spanish households, by 4% less than a year earlier. Loans for home purchase represent 10.2% of it.

Santander aims at expanding the portfolio and increasing loyalty of its clients. Its new mortgage approval has skyrocketed by 73% by the end of September. All its loans in Spain add up to 156.4 billion euros. From January to September, the stock rose by 1.6 billion euros.

The mortgage offer modification gives Santander a place among the most desirable creditors in the market, currently led by ING and Deutsche Bank, offering the Euribor plus 1.69% and 1.59% from the second year on respectively. The catch is the set of conditions, like purchase of loyalty products, payment cards, etc.

Returning interest in borrowing calls attention to the profitability of the segment. Among other reasons, the increased dynamics shown by the real estate sector convinces banks the time is right to lend. As per official data, new mortgage approval jumped by 18% in October, linking five months of continuous advance. That month saw 17.687 new loans.


Original story: Expansión (by M. Martínez)

Translation: AURA REE