Pacific Investment Management is raising at least $1 billion for a private fund to buy troubled loans from banks divesting assets to meet new rules, said two people briefed on the plans.
The PIMCO Bravo fund, short for Bank Recapitalization and Value Opportunities, will acquire commercial and residential mortgage loans and other debt, according to a prospective investor who asked not to be named because the capital raising is private. PIMCO plans to work with a loan servicer to renegotiate the terms of the acquired debt directly with creditors, the client said.
PIMCO’s institutional fund will target smaller lenders and community banks, and won’t buy consumer debt such as credit-card and auto loans, the investor said.
Mark Porterfield, a PIMCO spokesman, declined to comment.
Financial institutions are selling assets after the 27-nation Basel Committee on Banking Supervision adopted standards in September that will more the double the ratio of capital banks must hold in relation to the amount of risk on their balance sheets. PIMCO has raised at least $5 billion from institutional clients to buy distressed mortgages and bonds backed by real estate loans since the global credit crisis began in late 2007.