Facts and investor expectations of the CEE NPL market

Facts• Global investors raised EUR 40bn to invest in distressed assets

across Europe

• Volksbank Romania’s EUR 495m NPL portfolio purchased in July 2014 by Deutsche Bank, AnaCap, HIG and APS Holding put CEE on the

map

• EUR 3bn face value of landmark NPL transactions in the CEE Region 2013-2015, according to Deloitte

• Deloitte estimates a 15% to 25% IRR for NPL transactions in CEE

Region

Facts/2• Last Vienna Initiative’s deleveraging and credit monitor reported

Q315’s external position (lenders’ external claims) of CESEE countries declined by 0.36% of GDP, 8.5% of GDP decline since 2008

• domestic credit in CESEE rose by 2.8% yoy in November 15

BUT mainly concentrated in Czech Republic, Slovakia and Poland

“Since January 2015 credit had been contracting or remained anemic in Hungary, Slovenia, Bulgaria and Croatia”

Sentiment of the sellers is improving

•

Facts/3 – some correlations

Investor cahiers de doleances• CEE is not Spain

– big tickets bias “less than EUR 100m is not worth it” – lack of local servicers holding international standards• Legacy of ineffective insolvency legal frameworks

• Small and fragmented SMEs • Too complex transactions as Project Neptune’s EUR

3.6bn NPL portfolio• Banking license required to operate in some countries

Investor expectations • Romania – EUR 12bn pipeline, effects of new VAT,

dividends and insolvency law package • Serbia – deleveraging of SMEs <EUR 20m turnover

NPLs• Hungary – State backed bad bank to sell EUR 6bn

CRE assets • Slovenia – State to exit/Apollo’s NKBM deal, build a track record after BofA and York Capital transactions

• Bulgaria – retail NPLs to pick up

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leveraged finance and asset-backed markets.

Thank you! antonio.vanuzzo@debtwire.com

@antoniovanuzzowww.linkedin.com/company/debtwire