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UniCredit sells risk on $1.2 billion of loans to U.S. fund

Italy's largest bank UniCredit is pictured in downtown Milan September 12, 2013. REUTERS/Stefano Rellandini
Italy's largest bank UniCredit is pictured in downtown Milan September 12, 2013. REUTERS/Stefano Rellandini

By Francesca Landini

MILAN (Reuters) - UniCredit has sold some of the risk on a 910 million euro ($1.2 billion) portfolio of Italian project finance loans, freeing up capital for new lending and benefiting from growing appetite for such deals from specialist investors.

The deal could be followed by similar transactions, a source close to the bank said, as UniCredit seeks to increase loans to Italian companies at a time when the first signs of economic recovery are emerging in the euro zone's third-largest economy.

"The transaction signals a strong interest of foreign investors for Italian assets," a UniCredit spokesman said.

A health check for euro zone banks and pressure from the Bank of Italy have forced Italian banks to write down the value of problematic loans in the past months, attracting foreign buyers to some of these assets.

UniCredit said on Tuesday it had sold the risk on junior and mezzanine notes to the International Infrastructure Finance Company Fund and Mariner Breakwater, two funds managed by Mariner Investment Group, a U.S. hedge fund.

Neither UniCredit nor Mariner Investment Group would disclose the value of the transaction.

The U.S. hedge fund said the deal was the first one of a new investment business, dubbed Mariner Infrastructure Investment Management, it has just launched.

Through this vehicle, the hedge fund is channelling funds from institutional investors to buy debt in infrastructure, energy and transport sectors, Marine Investment Group said in a statement.

Banks that need to offload risk to comply with tighter rules for regulatory capital are the targets for the new business, the U.S. fund said.

Italian banks cut lending to companies by 98 billion euros between November 2011 and November 2013, according to data published by the country's central bank this month, as lenders tried to keep a lid on surging bad loans.

Both risky lending and non-performing loans are constraining the ability of Italian banks to give fresh credit to companies and the Bank of Italy has urged lenders to start selling their bad debt to free up capital.

In December UniCredit reached an agreement with Cerberus European Investments LLC to sell a portfolio of non-performing loans with a gross value of around 950 million euros.

(Additional reporting by Danilo Masoni; Editing by Mark Potter and Pravin Char)

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