Nord/LB Norddeutsche Landesbank has agreed to sell a portfolio of its performing and non-performing shipping loans originated by Nord/LB to KKR Credit, which is buying the loans in partnership with a sovereign wealth fund.
Financial details about the transaction were not disclosed.
The initial $1.5bn portfolio will include up to 100 ships, which will be entered into the investors’ joint portfolio management company when the deal closes. The new management company is designed to be open to manage the portfolios of other third-party banks, Nord/LB said.
“The agreement reached with the investors is a significant milestone for the bank as it continues to effectively manage its balance sheet through the ongoing shipping crisis. This initial sale clearly demonstrates the bank’s ability to attract capital from internationally renowned investors and at the same time yields a very tangible reduction to the bank’s shipping exposure,” said Dr. Gunter Dunkel, chairman of the Nord/LB’s management board.
Dunkel said the deal will reduce the bank’s overall ship loan exposure from €18bn to between €12bn and €14bn when the transaction closes, which is expected in the fourth quarter this year.
The deal itself is expected to be structured as a securitisation, in which Nord/LB and the buyers will act as the initial investors.
Johannes P. Huth, head of KKR Europe, Africa and Middle East, said this deal is “in line with KKR’s focus on investing in and managing banks’ non-core and under-performing assets”.