Barclays sells credit market assets worth $12.3bn

16th Sep 2009 13:54

Barclays is restructuring $12.3bn of credit market assets by selling them to a new fund which will buy the assets with a loan from the UK bank.Protium Finance, run by former head of Barclays Capital's principal mortgage trading group, Stephen King, and Michael Keeley, once a member of Barclays Capital's management committee, will manage the assets over time to benefit from their long term cash flows. The $12.6bn ten-year loan provided to them by Barclays will be repaid during the term from cash generated by the fund. Any excess cashflows following repayment to Barclays will go to the partners of Protium.Barclays is selling the assets at current fair values, so doesn't expect to record a gain or a loss on completion of the sale. 'We are not seeking through the transaction to effect a change to our underlying credit risk profile,' said Barclays finance chief Chris Lucas. 'But we are restructuring a significant tranche of credit market exposures in a way that we expect will secure more stable risk-adjusted returns for shareholders over time.''We also bring in investors with an appetite for the cash flows arising from the assets,' he added.The assets comprise structured credit assets insured by monolines ($8.2bn), RMBS/Other ABS assets ($2.3bn) and residential mortgage assets ($1.8bn) held in Barclays Capital. Barclays says the deal will enhance shareholder value by lessening the potential impact of short term movement in market values and monoline downgrades.