RLPC-CS sells 135 mln euros of European leveraged loans

By Tessa Walsh and Zaida Espana

LONDON May 15 (Reuters) - Credit Suisse (CSGN.VX) sold a 135 million euro portfolio of high-quality European leveraged loans in a secondary market auction on Thursday, banking sources said.

Credit Suisse is taking advantage of the recent rise in secondary prices to achieve best price for the portfolio and received strong bids.

"It was a great response with very strong bids, it confirms that there is liquidity out there, and our expectations were more than met," a trader close to the deal said. Average bids on Europe's top 40 leveraged loans have rebounded to 90.39 percent of face value, giving gains of 537 basis points from mid February's lows of 85.02, according to data from Reuters Loan Pricing Corp.

The loans that were sold were a pocket of assets held in the bank, and were not part of Credit Suisse's banking book or a warehousing facility for Collateralised Loan or Debt Obligations (CLOs or CDOs), a banker close to the sale said.

"It's not warehouse or stuff we're stuck with it's a lot of on the run assets and leading names," a banker close to the deal said.

Traders away from the auction said the portfolio was inventory from the bank's proprietory trading desk.

The portfolio contained first lien paper of leading leveraged loans such as Amadeus Global Travel Distribution and directories business PagesJaunes, a small percentage of less well-known credits and a handful of second lien paper.

More than 60 investors bid for the assets in response to a Bids Wanted in Competition (BWIC) request by a noon deadline on Thursday.

Bids were received on every asset, and all but two of the 31 loans were sold, traders said. Most of the loans were sold individually, with two investors picking up more than two or three names. Traders anticipated average bids of 91.5-92 percent of face value, higher than the 480 million euro auction of Deerfield Capital's Coltrane CLO by receivers KPMG on April 16 which fetched an average bid of 86.7, due to the higher quality of assets on sale.

"The auction shows that bids are there for quality assets, the market's in pretty decent shape, people have cash to spend and will put bids on the right assets," a trader close to the sale said.

The portfolio auction was executed as a cash sale, and may ease the secondary loan market's recent lack of supply as prices continue to rise, deterring would-be sellers.

(Editing by Rory Channing)