Barclay's sells to hedge funds its loans to Connaught - paper

LONDON Aug 4 (Reuters) - Lenders to Connaught Plc CNT.L, the cash-strapped social housing provider, have started selling their loans to the company, according to the Financial Times.

Citing people familiar with the transaction, the newspaper said on Wednesday that Barclays (BARC.L) sold its exposure of 19 million pounds on Monday night for about 37 percent of face value.

The loan was sold to several hedge funds considered to be specialists in distressed debt investing, the FT said.

The move follows an announcement last month by Connaught, whose core business is vulnerable to the heavy cuts in spending announced by the government, that it was desperately in need of cash and was set to breach the terms of its loans. [ID:nLDE66P0DQ] [ID:nLDE6671EQ]

Barclays, part of Connaught's syndicate of banks led by the Royal Bank of Scotland (RBS.L), is one of the first banks to sell their loans, the newspaper said. Other members include Lloyds Banking Group (LLOY.L) and Bank of Ireland (BKIR.I).

Allied Irish Bank (ALBK.I), a member of the original lender group, had sold its loans to another member of the syndicate, the FT said, citing a person close to the situation.

(Reporting by Karolina Tagaris; editing by Phil Berlowitz)