With over 33 billion of impaired loans sold in the first 5 and a half months of 2017 - and with the closure of the "FINO" project, which saw the maxi sale of 17,7 billion euros of mixed impaired loans from Unicredit to PIMCO and Fortress – 2017 will go down in history as the year of the “explosion of NPL operations”. According to Banca IFIS estimates, contained in the exclusive report "Market Watch NPL - The Italian Scenario", approximately 71 billion euro of additional non-performing loans will be sold by 2017, thus reaching the figure of 104 billion euro of loans distressed traded on the Italian market.
An amount that makes the volumes of non-performing loans sold in 2015 (19,1 billion) and 2016 (17,3 billion) seem simplistic. A scenario in which the regulatory variables, which will shape the future NPL market, will have to be considered. The ECB guidelines, in particular, will have a positive impact both on the transfer of loans and on internal asset management strategies, with the aim of identifying the right mix for each portfolio.
The growth of the securitization of non-performing assets reaches a new peak in the first part of 2017, continuing a trend that has continued since 2012: in fact, 72,4 billion euros of NPLs were securitized in the first quarter of 2017, with an increase of 134% in 5 years. The average prices of secured portfolios (backed by assets or real estate) show a drastic drop after the surge at the end of 2016. In the second quarter of 2017, the price level for these assets fell to 33%, as a result of an increase in supply in this market segment. If the prices of secured assets fall, those of consumer portfolios rise instead. The average price is around 11% thanks to an increase in demand and the higher quality of credits (and their information assets).
To cope with such a large amount of NPLs, international players continue to acquire servicing platforms and thus increase competitiveness and profitability. In 2017 there were 4 transactions of this type: Bain Capital acquired Heta Asset Resolution; Varde acquired 33% of Guber; KKR acquired Sistemia; finally, Lindorff acquired Gextra.
The Market Watch also notes the following:
• In 2017 domestic buyers begin to show a strong interest in Italian non-performing loans
compared to previous years;
• There are 32,4 billion close to closing, out of a total pipeline of 70,9 billion;
• The growth of GDP and the reduction of bankruptcies have led to a progressive stabilization of
bad debts;
• NPLs show a drastic reduction due to the important write-downs.
