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BlackRock, HSBC among largest buyers of Evergrande debt: Morningstar

edited September 22 in Other Investing
From Reuters - “BlackRock added 31.3 million notes of Evergrande's debt between January and August 2021, pushing its stake in the company to 1% of the assets in its $1.7 billion Asian High Yield Bond Fund, according to Morningstar. HSBC increased its positions in the company by 40% through July, according to Morningstar. UBS increased its position by 25% through May, the latest date available in the fund tracker's database. None of the companies responded to requests to comment for this story. At the same time, other large fund firms such as Fidelity, Pimco, and Allianz cut their positions in the company by up to 47% between January and July, Morningstar said.”

Reuters Link


There is a more comprehensive / incisive story on same topic in the September 22 Financial Times, but more difficult to access due to paywall.

Possible FT Links:

From the Financial Times - “BlackRock in August bought up five different Evergrande dollar bonds through one of its high-yield funds, which had holdings in the developer then worth $18m, Morningstar data show. The size of the holding had already expanded sharply this year as the fund’s assets under management rose. The biggest asset manager had exposure of close to $400m across its funds, according to data compiled by Bloomberg based on June, July and September filing dates. An HSBC-run high-yield fund in July was also a net buyer of Evergrande’s debt and has increased bond holdings 38 per cent since February as the fund expanded in size, the Morningstar data showed, though the value of its exposure at $31m declined over that period due to falling prices. The data highlight a willingness on the part of some of the biggest investors in Evergrande’s offshore bonds to continue to add to their holdings even after prices had started falling in the earlier stages of a liquidity crisis that is rippling across markets.”


Comments


  • Anyone buying Chinese-based debt is likely rolling the dice and hoping for the best (given the nature of PRC markets and governments) imho. I wouldn't touch it with a bargepole.
  • Same here. The political risk among EM countries has lots to be desired.

    Read somewhere last night that PRC is getting involved (with cash) to contain the spill over into the rest of Chinese real estate sector when Evergrande defaults on the debt payment. (will post the article when I located that later).
  • edited September 24
    Depends on ones time frame. These institutions must not be investing but trading for narrowing of discounts. Mine could be a minority view, but BlackRock is not going to give you a black eye when everybody is watching,
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