Wednesday, October 29, 2008

Barclays Capital Loan Sale Finds Few Buyers

--Leverage loan trades at 70 --more loans up for sale Barclays Capital sold more than 30% of the $970 million of mostly leveraged loans it put up for sale to liquidate positions linked to a derivatives agreement with hedge fund Black Diamond Capital Management LLC, people familiar with the situation said. The bank received bids for 75% of the loans and other debt that were largely denominated in U.S. dollars, though some were listed in euros and sterling. The sale came as hedge funds and institutional investors have been forced to sell a variety of assets to meet margin calls and redemptions from clients. Other bid lists circulated Tuesday totaling more than $4 billion, which included unsecured corporate bonds and credit-default swaps, sources familiar with the lists said. The small percentage of assets sold suggests that bidders drove too hard a bargain on the price of the assets. The loan market has fallen about 13 cents since the beginning of October, trading on average at around 70 cents on the dollar Tuesday, according to Standard & Poor's Leveraged Commentary & Data. This month, some $3.3 billion of leveraged loans have been up for sale. That is the most in a single month, outstripping the previous high of $2.1 billion in August 2007, LCD's figures show. The Barclays loans were linked to derivatives agreements, known as total-return swaps, or TRS, between the bank and BDC Finance, a fund managed by Black Diamond, of Greenwich, Conn.

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