Loan portfolio sales—an introduction
Loan portfolio sales—an introduction

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Loan portfolio sales—an introduction
  • What is a portfolio sale?
  • Assets typically included in a loan portfolio sale
  • Key parties involved in a loan portfolio sale—sellers
  • Key parties involved in a loan portfolio sale—buyers
  • Transaction process for a loan portfolio sale

This Practice Note provides an introduction to loan portfolio sales, considering in particular the types of portfolios that exist for sale and the identities and motivations of typical sellers and buyers. It also describes a typical portfolio sale process.

For information on the key issues which may arise on loan portfolio sales, see Practice Note: Loan portfolio sales—key issues and for information on the main legal documentation used, see Practice Note: Loan Portfolio Sales—legal documentation.

What is a portfolio sale?

A loan portfolio sale is the disposal by a lender of a group of loans, rather than a single loan (as might be undertaken in a trade on the Secondary loan market). The selling lender may have been involved in origination or initial syndication of the relevant loans, or acquired them on the secondary loan market from other investors.

Since the 2008 credit crisis, owing to political and regulatory constraints (see 'Motivations of sellers' below), the volume of loan portfolio sales has increased markedly and activity is widely expected to continue over the coming years.

For information on trading individual loans on the secondary loan market, see Practice Notes: Key provisions in the LMA standard terms and conditions for secondary debt trading and Practice Note: Secondary trading of distressed debts.

Assets typically included in a loan portfolio sale

Loan assets

A portfolio