Wednesday, July 25, 2007

Another One Bites The Dust....Hedge Fund Firm Absolute Capital Suspends Withdrawals

After reading the management statements it is now wonder that investors run for the money...... But thats the downside of doing no due dilligence

Kein Mitleid für die Investoren. Wer so einem Management Gelder ohne weitere Überprüfung hinterherschmeißt muß mit dem Totalverlust rechnen

July 26 (Bloomberg) -- Absolute Capital Group Ltd., an Australian hedge fund that invests in collateralized debt obligations, suspended withdrawals from two of its funds after forecasting losses amid a rout in U.S. subprime mortgages.

The firm froze its Yield Strategies Fund and Yield Strategies Fund NZD, which together have about A$200 million ($177 million) under management,

Absolute Capital, which says it doesn't invest in the riskiest portion of CDOs, is suffering from the widening impact of delinquencies on U.S. home loans to people with poor credit. Basis Capital Fund Management Ltd., another Australian hedge fund battered in the North American market, has hired Blackstone Group LP to negotiate with bankers to help it limit losses.

Thanks to Minyanville

``Because of the contagion from subprime, all of the credit sectors are re-pricing,''

Australia's hedge fund industry has been rocked by losses at Basis Capital, which has said the value of its Yield Alpha Fund may plunge more than 50 percent if its assets are sold at distressed prices. Sydney-based Mariner Bridge Investments Ltd. on July 20 wrote down the value of its U.S. residential mortgage-backed securities.

Swelling Assets
The nation's 20 million people are the world's biggest investors per capita, making it the fourth-largest managed funds industry.

Australian hedge fund managers directly controlled A$41 billion in assets as of July last year, the most in Asia, according to AsiaHedge. Assets almost tripled in the two years to June 2006 as money from compulsory pension savings, tax breaks, a new state-owned investment fund and takeovers boosted fund inflows, according to government data.

Absolute Capital said it won't process any requests for withdrawals until Oct. 25, estimating it may take three months for enough buyers to return to the CDO market.

Entwistle said 50 percent of Absolute Capital's two funds is invested in the so-called ``mezzanine'' portions of CDOs, which are typically assigned the second-highest non-investment grade rating of BB by ratings companies.

>doesn´t they say just say ....

>haben die und nicht gerade das erzählt....

Absolute Capital, which says it doesn't invest in the riskiest portion of CDOs



`More Pain'
Basis Capital's investments included the unrated portions of CDOs, the first in line for losses when borrowers fall behind on mortgage payments.

> LOL!. See comment above.....Siehe Kommentar.....

Investors earlier this month were demanding an extra 10.5 percentage points in yield over benchmark rates to own some of the lower investment-grade rated parts of CDOs, up from about 3.1 percentage points in July 2006, according to data compiled by Morgan Stanley.

Sales of CDOs rose fivefold to $503 billion last year, compared with 2003. Investor appetite for the securities is now waning. Analysts at New York-based JPMorgan Chase & Co. this week said CDO sales slumped to $3.7 billion in the U.S. this month from $42 billion in June.

Ratings agencies have been criticized by investors for not acting quickly enough to the subprime mortgage crisis. Leah Rhodes, a Melbourne-based director of structured finance at Standard & Poor's, today said losses from U.S. subprime loans ``did exceed our expectation.''

> I don´t think that this statement will be enough to defend them in the upcoming investigation.....

> Glaube kaum das diese Art von Aussagen in den sicher folgenden Untersuchungen genügen wird.....

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