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Barclays Debt Auction Received Bids On 75% Of Assets - Source

By Kate Haywood

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Barclays Capital offloaded over a third of a $970 million portfolio in debt assets Tuesday as investors drove a hard bargain on price, a person familiar with the situation said.

The bulk of the assets Barclays was looking to sell were leveraged loans that have been losing value in recent weeks.

Barclays received bids on about 75% or $728 million of the assets it was offloading to liquidate its positions linked to a complex derivatives agreement with hedge fund Black Diamond Capital Management.

More than 30% of the assets traded, the person said. The person didn't indicate what prices investors were willing to pay for the assets.

The auction comes as hedge funds and institutional investors have been forced to sell a variety of assets to meet margin calls and redemptions from clients.

The list of assets for sale included mainly senior secured term loans, although there are a handful of corporate bonds, as well as revolving loans denominated in dollars, euros and sterling. It included loans from a number of household names, such as Gate Gourmet International, HCA Inc. and Ineos Holdings Ltd. There were also pieces of loans made to other well-known names, including United Air Lines, Air Canada and American Airlines.

The assets up for sale were linked to derivatives agreements, known as total return swaps, or TRS, between the bank and BDC Finance - a fund managed by Black Diamond, based in Greenwich, Conn.

Black Diamond announced last week that it had terminated the TRS with Barclays due to a disagreement over money it claimed the bank owed.

 
   -By Kate Haywood, Dow Jones Newswires; 201-938-2348; kate.haywood@dowjones.com 
 

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(END) Dow Jones Newswires

October 28, 2008 17:41 ET (21:41 GMT)


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