Loan Trading Increases As Europeans Shed Assets

European banks are increasingly shedding USD asset in the Latin American secondary loan market as they look to comply with capital requirements and retrench in the region, say bankers. But so far the sell-off seems to be an orderly one as there is more than a fair share of willing buyers, particularly among local institutions. Traditionally the domain of investments banks looking to reduce exposure to certain credits, the LatAm secondary loan market has arguably received a boost from increased activity with prices largely falling in line with CDS levels. “It is not a fire sale,” says one banker. “There is not too much portfolio dumping, and sales are $5m, $10m and $15m [in size]. Local banks, whose cost of funding is relatively high in dollars, are heard taking advantage of such sales to stock up on credits they like.