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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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February 22, 2008 1:15 PM ET
In what may well be a sign of things to come, Mission Capital Advisors said it is accepting bids for a $131.2 million portfolio of non-performing loans secured by commercial mortgages foreclosed on by a Midwestern bank. David Tobin, a principal at Mission Capital, which manages the sale of troubled mortgage loan portfolios and real estate assets for lenders, said that “with the market conditions as they are, we expect a significant increase in similar offerings throughout the year.” “The pace of offerings has picked up dramatically over the past year,” which has been one of his firm’s busiest, he added. “We did $5 billion of debt sales last year, all of it seasoned performing, underperforming, or non-performing [loans].” Mr. Tobin noted that “even the big investment banks are having trouble placing these [types of] loans, so we’re working twice as hard this year.” More ominously, he predicted commercial property values are heading for a steep fall due to the rising tide of troubled portfolio sales by banks, as they move to get non-performing assets off their books. It’s tough for banks to determine mark-to-market prices because commercial-loan backed packages being resold right now have to go through a price discovery process, Mr. Tobin said. Packages whose chief underlying assets are residential mortgages are getting bids of about 50 cents to 60 cents on the dollar, down from about 90 cents in late 2006 and early 2007. The latest package of loans from the Midwestern bank, which Mission is putting up for bid in March, is secured by various commercial and residential real estate in Western Florida, including non-performing loans secured by various types of commercial mortgages and properties. Mission Capital is managing the sale in a sealed bid process, soliciting bids from prospective bidders for the purchase of individual loan pools, any combination of loan pools or the entire portfolio. With bank lending drying up, commercial borrowers with older loans coming due are now also having trouble lining up refinancing. Some older loans are ending up being sold within the distressed packages. Eventually, Mr. Tobin believes the declines in the commercial real estate market could mimic those being registered in the residential market now. “The delinquency trend is obviously increasing,” he said. “But when a loan out for 10 years can’t get refinanced, that tells you we’re giving back a lot of the gains of the past several years.”
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