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Bloomberg
Europe’s biggest debt collector, Intrum AB, says it doesn’t see the political turmoil in Italy hurting its business. “The way things look today, and†given “what we have on our books, we think that is very good debt,†said Louise Bergstrom, head of investor relations at the Stockholm-based company.
Intrum, which operates in 24 countries, offers credit management services and buys debt portfolios from corporate clients and banks. Moody’s Investors Service cut the outlook on Intrum’s credit rating last month, to stable from positive, citing its partnership with Intesa Sanpaolo SpA to service non-performing loans in Italy. That deal, which has yet to be completed, was announced in mid-April.
The 60 percent senior tranche of the Intesa portfolio will be financed by a pool of banks, while the mezzanine and equity tranche will see Intrum and the co-investor buy a 51 percent stake and Intesa hold the remainder. Banks including Credit Suisse Group AG, HSBC Holdings Plc and Banca Imi, a division of Intesa, are set to provide financing for the bad-loan portfolio, people familiar with the matter have said.
Yields on Intrum’s bonds rose as concern grew that political turmoil in Italy might be the beginning of a new euro-zone debt crisis. Yields have since retreated a bit, after the company said its Italy exposure wasn’t suffering.
Intrum’s share price has also recovered after “the company said that the current activity in Italy so far hasn’t been hit by the political uncertainty,†Nordea Bank AB said in a client note. Nordea is advising investors to buy Intrum stock, and sees the shares trading at 305 kronor in 12 months’ time, up some 45 percent from the
current price.
“Political instability isn’t anything new, and it’s something we’ve considered when we look at the price and what we paid,†Bergstrom said. “We’re still very happy with the transaction and believe strongly in it,†she said, referring to the Intesa deal.
Hoist Finance AB, another Swedish debt collector, says the panic hitting Italian markets is unlikely to last. “Our assessment is that the likelihood of a dramatic deterioration†over the long term “in the Italian market is low, even if it’s very turbulent right now,†Michel Fischier, head of investor relations at Hoist, told Bloomberg.
Bergstrom at Intrum said that with Italy’s non-performing loan market representing one of the biggest of its kind in Europe, it’s important to be exposed to the country if “you want to be one of the leading players in Europe.