CPPIB looking to sell Spanish distressed debt portfolio

financialpost.com:

Canada Pension Plan Investment Board has put a portfolio of distressed Spanish loans up for sale, as the fund works to reduce its exposure to the country built up during the financial crisis last decade.

The sale comprises loans with a face value of around €300 million (US$329 million) in unsecured, non-performing loans, according to people familiar with the matter. Canada’s largest pension fund obtained the assets bundled along with a larger portfolio and they will likely be sold at a heavy discount to par, still generating returns, the people said, asking not to be identified discussing private details.

The Canadian pension fund previously acquired substantial debt assets, including real estate portfolios, from Spanish banks such as Banco Santander SA. While working down that exposure, the fund’s broader strategy involves nearly doubling the size of its private credit holdings over the next five years.

Earlier this year, CPPIB had explored the sale of a separate portfolio with a face value of around €1 billion although that process is now on hold, according to people familiar with the matter.

CPPIB declined to comment on the potential sale.

The fund earned an eight per cent return in the fiscal year ended March, growing to US$632 billion in assets from US$570 billion a year earlier, as double-digit gains in stocks, credit and private equity made up for weaker performance in emerging markets and real estate. Its credit portfolio jumped 10.8 per cent.

Bloomberg.com