SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

UniCredit is set to sell €2bn ($2.3bn) in impaired loans to the US investment fund Davidson Kempner owned bad loan specialist Prelios, according to three sources. UniCredit halted a process to hire a debt recovery firm for the portfolio. As per Reuters’ calculations, the sale would reduce UniCredit’s impaired loans to about 3.1% of total lending as compared to 3.6% as at end-December 2021 when it totaled €16bn ($18.3bn). The portfolio of bad loans consists of “unlikely to pay” (UTP) loans, which are not yet in default but are unlikely to be repaid in full, with an average size below €5mn ($5.7mn) each. Reuters notes, “Recovering UTPs is more complex and costly than liquidating defaulted loans, often entailing debt restructuring, turnaround plans and new investment to return businesses to health”. Both UniCredit and Prelios did not comment on the news.

UniCredit’s bonds were slightly higher with its EUR 6.625% Perp up 0.5 points to 104, yielding 3.45%.

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