Italian bad loan prices must fall to lure back foreign buyers - Axactor Italy

Axactor ASA

18/11/2020 17:07

MILAN, Nov 17 (Reuters) - International investors will steer
clear of Italian impaired bank loans until prices fall to
reflect the higher risks associated with the COVID-19 crisis,
the head of the Italian arm of Norway's Axactor  AXAC.OL  said.
    The Oslo-listed firm invests in and manages bad loans in six
European countries.
    In comments to Reuters, Axactor Italy CEO Antonio Cataneo
said the pandemic had forced loan collectors to revise
projections to reflect the fact that it will take longer to
recover the loans and it may be more difficult given the
downturn caused by the healthcare emergency.
    After a hiatus caused by the first wave of the pandemic,
Italy saw buoyant market activity, with bad loan prices
supported by strong domestic demand. Cataneo said the second
wave would leave a deeper mark.
    "Up until September ... deals were closed with prices that
weren't that different from the pre-COVID situation," he said.
    "The risk associated with the pandemic at the time had not
been fully factored in. We expect such risk will be included in
portfolio prices going forward." 
    The price investors in bad debts are willing to pay hinges
on the costs they bear to secure financing and the returns they
target, which rise in proportion to perceived risks. 
    International investors like Axactor face higher funding
costs than many Italian rivals such as Banca IFIS  IF.MI  which,
as a bank, can tap cheaper liquidity.
    Cataneo said Axactor and other international rivals had
decided not to bid for some Italian bad loan portfolios because 
prices they were ready to offer were below those paid by Italian
bidders.
    "I'm not sure for how long the market can go on relying
solely on domestic investors, even in a market like Italy where
there is a strong local investor presence," he said.
    "At some point prices will have to come down to give
international players the confidence to come back." 

 (Reporting by Valentina Za; Editing by Kirsten Donovan)
 ((valentina.za@thomsonreuters.com; +39 02 6612 9526;))