## [NPLs and REOs: LatAm, Spain and Portugal wake up to debt market new normal](/pl/en_GB/new/npls-and-reos-latam-spain-and-portugal-wake-debt-market-new-normal) # NPLs and REOs: LatAm, Spain and Portugal wake up to debt market new normal 07 / 09 / 2021 - - [](https://www.linkedin.com/sharing/share-offsite/?url=https://www.garrigues.com/pl/en_GB/new/npls-and-reos-latam-spain-and-portugal-wake-debt-market-new-normal) - []() - []() [DOWNLOAD DOCUMENT ![Download](/sites/default/files/inline-images/flecha-abajo.png)](/sites/default/files/noticias/files/npls_portfolios_and_reos_deals_an_update_at_july_2021.pdf) Previous Next ![](/sites/default/files/noticias/img/npls_2t_2021_0.jpg) **Transactions with non-performing loans (NPLs) started to take off in the second quarter of 2021, especially in Spain and Portugal. The gradual fading in continental Europe of the health impact of COVID-19, combined with the progress made in vaccinations, have allowed various “sleeping” transactions to be brought back into motion and new transactions to be closed between the first and second quarters of 2021. Meanwhile, in the global arena, there have now been numerous alerts from regulators over the deteriorating quality of financial institutions’ loan assets. The coming to an end of governmental relief or forbearance measures, combined with the heightened impact of COVID-19 on very specific business sectors, are likely to hasten the pace of NPL transactions over coming months.** **Resumption of competitive processes with NPL portfolios** According to data published by the European Banking Authority, the aggregate stock of NPLs is in excess of €510.5 billion**.** Of this amount, 125.4 billion are held in France, making it the country with the highest NPL figure in the EU. Italy comes second, with NPLs totaling €98 billion and accounting for 5.4% of the aggregate stock of loans. **Spain** takes third place with NPLs amounting to €76.9 billion and a 3% share of the total. Followed by Greece (€62.2 billion), the Netherlands (€37.3 billion), Germany (€33.3 billion), Belgium (€16.9 billion) and **Portugal** (€13.4 billion). In the second quarter of 2021, NPL transactions took off worldwide, following very modest levels in 2020. Although an immediate return to previous activity levels is not expected, the outlook for the third and fourth quarters of 2021 is reasonably better than the way things looked at the beginning of 2021. **Alerts from regulators concerning the quality of assets** Globally, regulators have warned of latent and very considerable risks in the non-performing assets of financial institutions. Although the NPL ratio has not increased in aggregate terms, it has risen in specific sectors such as retail, consumer spending and for the companies or industries that have been hardest hit by the restrictions (mainly hotels, airlines, manufacturing, tourism ancillary businesses, leisure and entertainment). **Impact of COVID-19 on corporate debt and new challenges for corporate debt workouts** More than a year after COVID-19 burst onto the scene, it is clearly apparent that the pandemic’s effects on the NPL market will be very different from those caused by the worldwide economic crisis related to property development, construction and associated financial products (subprime mortgages, credit default swaps, and derivatives, among others). The economic crisis caused by the pandemic has already brought important new changes to the NPL market, such as: (i) the change to the classes of debtors for non-performing loans and credit facilities; (ii) the modification of underlying assets and of personal guarantees for non-performing positions and (iii) the design, creation and implementation of different workout processes for the transferred loans. Elsewhere, guarantee facility mechanisms provided by the governments of various countries have brought new question marks which will have an impact on transfers of NPLs, related obviously to the ability to transfer –without restrictions, subject to conditions or even without the option of transferring – the security associated with secured loans. In the previous crisis, delinquent debtors –especially corporate debtors connected with the real estate industry– could “hibernate” and even halt their operations, which, at a specific time, made it easier to repossess the assets underlying the transferred debt in NPL portfolios. However, this time there will be a much higher number of non-performing loan and credit facility debtors than in the previous crisis, companies that have places of business operating as going concerns, workers, clients, and additional funding needs. In anticipation of the additional liquidity that the transferred debtors are going to need to return to the performing route, there are already several players in the market who are creating, or developing their direct lending platforms even further, to support an operational or financial restructuring that will enable recovery of the non-performing loan or credit facility plus an extra sum in respect of credit facilities to be used to support a turnaround. **New legislation** So, what main trends are already visible in the main LatAm, Spanish and Portuguese markets? What transactions are being performed in these jurisdictions and which have yet to come? Garrigues is pleased to share our view of the main trends in these debt markets, drawing from our on-the-ground network of offices in Brazil, Chile, Colombia, Spain, Mexico, Peru and Portugal. [Restructuring & Insolvency](/pl/en_GB/tags/restructuring-insolvency), [Banking and Finance](/pl/en_GB/tags/banking-and-finance), [Spain](/pl/en_GB/tags/spain), [Portugal](/pl/en_GB/tags/portugal), [LatAm](/pl/en_GB/tags/latam) ### Contacts ![](/sites/default/files/styles/medium/public/team/photo/pedro_garcia_morales_en_20230601.jpg?itok=R4LMpt0Y) [Pedro García](/pl/en_GB/team/pedro-garcia-morales) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +56 2 29419000 [Santiago de Chile](https://www.garrigues.com/pl/en_GB/office/santiago-chile) ![](/sites/default/files/styles/medium/public/team/photo/victor_chiquero_mielgo_en_20240411.jpg?itok=MVOuAdQR) [Víctor Chiquero](/pl/en_GB/team/victor-chiquero-mielgo) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +34 91 514 52 00 [Madrid](https://www.garrigues.com/pl/en_GB/office/madrid) ![Foto del socio](/sites/default/files/styles/medium/public/team/photo/Gonzalo_Garcia-Fuertes_Iglesias_en_20250711.jpg?itok=IL22D4NU) [Gonzalo García-Fuertes](/pl/en_GB/team/gonzalo-garcia-fuertes-iglesias) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +34 91 514 52 00 [Madrid](https://www.garrigues.com/pl/en_GB/office/madrid) ![](/sites/default/files/styles/medium/public/team/photo/10001613.jpg?itok=yzB70NJN) [Gaspar Atienza](/pl/en_GB/team/gaspar-atienza-becerril) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +34 91 514 52 00 [Madrid](https://www.garrigues.com/pl/en_GB/office/madrid) ![](/sites/default/files/styles/medium/public/team/photo/Juan_Jose_Berdullas_Pomares_en_20250729.jpg?itok=6iu5Q25X) [Juan José Berdullas](/pl/en_GB/team/juan-jose-berdullas-pomares) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +44 (0) 20 7796 1940 [London](https://www.garrigues.com/pl/en_GB/office/london) ![](/sites/default/files/styles/medium/public/team/photo/Oscar_Arrus_en_20230526.jpg?itok=GHiKLd0s) [Oscar Arrús](/pl/en_GB/team/oscar-arrus) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +51 1 399 2600 [Lima](https://www.garrigues.com/pl/en_GB/office/lima) ![Diego Harman - Garrigues](/sites/default/files/styles/medium/public/team/photo/Diego_Harman_20230521.jpg?itok=edPI5LsW) [Diego Harman](/pl/en_GB/team/diego-harman) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +51 1 399 2600 [Lima](https://www.garrigues.com/pl/en_GB/office/lima) ![](/sites/default/files/styles/medium/public/team/photo/10010399.jpg?itok=hd4O1EKe) [Vasco Rodrigues](/pl/en_GB/team/vasco-rodrigues) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +351 213 821 200 [Lisbon](https://www.garrigues.com/pl/en_GB/office/lisbon) ![](/sites/default/files/styles/medium/public/team/photo/10010021.jpg?itok=63zfFxQ0) [Roberto Borrás](/pl/en_GB/team/roberto-borras-polania) ![](/themes/custom/garriguestheme/img/iconos/email-contacto.svg)[Contact]() - +57 601 326 69 99 [Bogota](https://www.garrigues.com/pl/en_GB/office/bogota) [Find more professionals](../team) ### Related services - [Restructuring and Insolvency ](/pl/en_GB/services/restructuring-and-insolvency) - [Banking and Finance ](/pl/en_GB/services/banking-and-finance) ### Related offices - - [Bogota](/pl/en_GB/office/bogota) - [Lima](/pl/en_GB/office/lima) - [Lisbon](/pl/en_GB/office/lisbon) - [Madrid](/pl/en_GB/office/madrid) - [Mexico City](/pl/en_GB/office/mexico-city) - [Oporto](/pl/en_GB/office/oporto) - [Santiago de Chile](/pl/en_GB/office/santiago-chile) ## Find a publication - [Administrative and Constitutional Law](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1422) - [Agribusiness and Food](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1417) - [Automotive](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1419) - [Banking and Finance](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1443) - [Corporate and M&A](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1441) - [Criminal Law and Internal Investigations](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1434) - [Data Economy, Privacy and Cybersecurity](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A10913) - [Dispute Resolution: Litigation and Arbitration](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1412) - [Energy](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A10916) - [EU and Antitrust Law](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1416) - [Family Business](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1413) - [Fashion Law](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1435) - [Financial Regulation](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A10915) - [Human Capital Services](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1431) - [Infrastructure](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A10914) - [Insurance](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1438) - [Intellectual Property](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1421) - [Labor and Employment](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1424) - [Life Sciences and Healthcare](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1429) - [Media and Entertainment](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1433) - [Planning, Zoning and Environment](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1444) - [Private Equity](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1439) - [Real Estate](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A10927) - [Restructuring and Insolvency](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1420) - [Securities Markets](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1442) - [Sports](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1430) - [Startups & Open innovation](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1426) - [Sustainability](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A10921) - [Tax](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1425) - [Technology, Communications and Digital](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1436) - [Tourism and Hotels](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1432) - [Transport, Logistics and Shipping](/pl/en_GB/markdownify/node/9587?f%5B0%5D=service%3A1428) Facet Services detail - [Publications](/pl/en_GB/markdownify/node/9587?f%5B0%5D=publication_type%3A794) - [Newsletters](/pl/en_GB/markdownify/node/9587?f%5B0%5D=publication_type%3A107) - [Garrigues collection](/pl/en_GB/markdownify/node/9587?f%5B0%5D=publication_type%3A101) - [Laws: amendments at a glance](/pl/en_GB/markdownify/node/9587?f%5B0%5D=publication_type%3A104) - [News](/pl/en_GB/markdownify/node/9587?f%5B0%5D=publication_type%3A105) Facet Publication type detail Min Max ## News search engine