Wall Street lenders are scrambling to understand the extent of losses on billions of pounds they lent to a UK-based mortgage provider that collapsed suddenly amid fraud allegations, reigniting fears of poor underwriting standards in the booming market for asset-backed lending.
Firms including Barclays, Jefferies and Apollo’s Atlas SP Partners, its structured credit arm, extended £2bn of financing to Market Financial Solutions. The London-headquartered firm previously lent to a Bangladeshi politician before it collapsed into insolvency on Wednesday amid accusations of double-pledging of its collateral.
Others potentially nursing losses stemming from MFS include TPG, the Texan private equity firm, and Avenue Capital, the distressed debt specialist, according to two people familiar with the situation.