Monday, June 18, 2012

CMBS, Distress Debt Plays Returning to Market

See full article here - I excerpted the last few bits on distressed debt below:

When it comes to investing in distressed debt deals, Sotoloff says the best value is found the securities space. “We were able to buy a significant amount of legacy loans,” he said. “There haven’t been as many as we expected, but that’s testament to the Fed’s efforts to keep liquidity in the market and keep banks afloat.”

The market has indeed shown a tremendous amount of rescue capital opportunities, said Gollenberg. “What was once a trickle of deals is now starting to become a steady stream of resolutions come through, where actual assets—those bank-owned properties—are starting to be resolved.”

More loans are coming out of special servicers, said Lesser; expect a few billion dollars worth to come out of that segment this year. European loan portfolios are also being sold, but it’s been very slow going. Two biggest sources, added Salem, are direct relationships with regional banks and special servicers. “More banks are starting to let go of assets.”

Kline, too, sees more activity out there than there has been in the past. “No doubt we’re going to see fewer banks over the next few years.”

Which led Donahue to comment that perhaps “too big to fail is creating too small to survive.”

1 comment:

crabsofsteel said...

first, the sell-side issues bonds they don't understand (after all, who's the borrower?) Then the buy-side figures they know better. It's going to be a long slow trod until both realize they invested in bad debt. See MSC 07-HQ13 to see what I mean.