BlueBay, Blackrock, Ashmore and UBS exhibited at Evergrande -Morningstar
SINGAPORE, Sept. 28 (Reuters) – BlackRock Inc (BLK.N) and Royal Bank of Canada (RY.TO) BlueBay Asset Management are among asset managers exposed to struggling developer China Evergrande Group (3333.HK) , while TCW and HSBC funds closed positions, researcher Morningstar said.
In a Morningstar analysis released on September 24, Morningstar also said that London-based funds UBS Group AG (UBSG.S) and Ashmore Group PLC (ASHM.L) maintain significant holdings in Evergrande debt, on the database updated at the end of August. Funds managed by Fidelity and SinoPac held significant investments, he said.
BlueBay told Reuters its participation was “very limited” and had been reducing it since late August. None of the other asset managers commented.
Evergrande owes $ 305 billion and is strapped for cash. Some investors fear that a business collapse poses systemic risks to China’s financial system and spills over into the world.
Last week, Evergrande failed to pay interest on a $ 2 billion bond due in March. He will default if he does not make any payment within a 30 day grace period. Read more
The asset management division of HSBC Holdings PLC (HSBA.L) and fund manager TCW liquidated their positions in Evergrande in September and August, Morningstar said. HSBC declined to comment and TCW did not receive an immediate response.
Credit Suisse Group AG (CSGN.S), not mentioned by Morningstar, sold its entire exposure to Evergrande debt last year, the Financial Times reported on Friday.
Another Swiss bank, UBS, is exposed to Evergrande debt totaling around $ 283 million across multiple portfolios, Morningstar said. Ashmore’s reached $ 146 million. Both declined to comment.
Morningstar had noted earlier that BlackRock’s exposure had recently increased. In his analysis on Friday, he said BlueBay had “gradually started to add.” Read more
“The investment team proactively reduced exposure to the company earlier this year,” BlueBay said in a statement.
Morningstar did not give a total amount for exposure to BlueBay, although the researcher listed two BlueBay funds in its top exposure lists with approximately $ 8 million exposure in July, as well as an index fund managed by BlackRock which he said had around $ 1.5 million in exposure in September.
Blackrock declined to comment.
Evergrande’s dollar bonds have plummeted since May, when the group delayed paying its suppliers. A $ 1 billion bond with a coupon payment due next week last traded at the distressed level of 27.5 cents on the dollar.
Of the other fund managers mentioned by Morningstar, only T Rowe Price Group Inc (TROW.O) – which closed its Evergrande position last year – made immediate comment when contacted by Reuters.
“A period of high, high-yield default rates could result in the closure of access to the dollar market for some weaker issuers,” said Sheldon Chan, portfolio manager of T’s Asia credit bond strategy. Rowe Price, in an email response.
“This can keep volatility high… and present attractive entry points to add exposure to the sector.”
Reporting by Tom Westbrook; Editing by Susan Fenton and Christopher Cushing
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