Loan sales volumes dropped off sharply as vendors reassessed their positions in the first quarter of 2016, according to the latest report on the sector from Cushman & Wakefield.
Volumes were down 91% on the previous quarter, with portfolio sizes dropping to an average of €207m (£164m) as launches of €1bn-plus face-value loan books were held back.
However, the loan sales market was still valued at around €3.7bn in the three months to the end of March.
C&W estimated that Spain had replaced Ireland during the first quarter as the source of the most deals, with 50% of the deals coming from the recovering nation’s banks.
In total Spain sold more than €1.1bn of portfolios, including the €645m Project Babieca from Bankia, which was eventually sold to Deutsche Bank.
The national asset management agencies, usually the largest issuers, represented just 14% of the market in the first quarter, but C&W said this is about to change with the upcoming Emerald, Ruby and Abbey portfolios from Nama and the expected sale of Propertize in May.
The mix of buyers was also a little different from previous periods, with Blackstone, AnaCap and Deutsche Bank replacing the usual Lone Star, Cerberus and Apollo mix.
Federico Montero, head of loan sales, EMEA corporate finance at C&W, said: “Despite the relatively quiet start to 2016, a significant increase in sales activity is expected over the next six months supported by around €28.6bn of live sales. We estimate that the 2016 closed transaction volume will be in the region of €70bn-€80bn.
“The loan sales market in Ireland and Spain has been successful due to the early adoption of asset management agencies and realistic provisions for their NPLs. Although Italy has taken some small steps towards dealing with a mountain of distressed debt, further reforms to foreclosure law and appropriate levels of provisioning are required in order to converge investor and vendor pricing and to evolve Italy into a key market.”
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