US-based hedge fund and global institutional investment firm Davidson Kempner Capital Management reportedly acquired around USD 1.4 bn in distressed loans from Abu Dhabi Commercial Bank (ADCB), Bloomberg reports, citing people it says are familiar with the matter. The portfolio is said to include a mix of secured and unsecured assets.

Distressed debt transactions are heating up in the GCC: The latest sale, which was first reported to be in the works in April, underscores growing appetite from global investors for distressed debt in the region as local lenders look to manage legacy exposures while international funds search for yield. Similar transactions include Deutsche Bank’s acquisition of USD 800 mn in bad loans from First Abu Dhabi Bank earlier this year. Meanwhile, in Saudi Arabia, several banks are said to be considering similar moves, with National Commercial Bank expected to close a transaction before year’s end, the business news service said.

This marks the second such transaction between Davidson Kempner and ADCB, which offloaded a USD 1.1 bn distressed portfolio to Davidson Kempner two years ago in what was seen as a landmark transaction for the region.

In context: The bank has been looking to clean up its balance sheet in the wake of major corporate defaults in recent years, including NMC Health.

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