Sellers’ Market

By

Aug 13, 2020

Banks
News
NPLs

It is going to be a sellers’ market.

Banks are currently preparing to sell their Non-Performing-Loans (NPLs) dealing with questions like when and where to sell. Based on the 2008 experience, the answer to the when question is really simple. The Longer You Wait the Deeper is the Discount.

And as to the where question.
Banks believe that in order to generate enough demand for their NPLs in competitive bidding they should do what they did in 2008. And also keep paying a 5% fee.

But this crisis is different.
This crisis will result in $400B NPLs that banks will need to sell. It is also reported that the Distressed Debt Funds already raised $1T to buy these NPLs.

Clearly, it is going to be a sellers’ market with many more buyers and lower expected discounts than the 2008 crisis.

Banks can choose newer platforms with confidence that the high demand will follow their NPLs wherever they are. 


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