BlueBay a buyer of Evergrande debt; Ashmore, UBS exposed - Morningstar

SINOPAC FINANCIAL HOLDINGS

27/09/2021 09:05

SINGAPORE, Sept 27 (Reuters) - Royal Bank of Canada's
 RY.TO  BlueBay Asset Management has joined BlackRock  BLK.N  in
accumulating credit exposure to ailing developer China
Evergrande in recent months, according to Morningstar, while
HSBC and TCW funds have closed positions.
    Morningstar's analysis, published on Sept. 24, also showed
that UBS and funds at London-based Ashmore Group  ASHM.L 
retained significant holdings in Evergrande debt, based on data
current at the end of August. Funds run by Fidelity and SinoPac 
held sizeable investments too, Morningstar's research showed.
    Evergrande  3333.HK  owes $305 billion and has run short of
cash. Some investors worry a collapse could pose systemic risks
to China's financial system and reverberate around the world.
    Last week Evergrande failed to pay interest on a $2 billion
dollar bond maturing in March next year. It will default if no
payment is made within a 30-day grace period.  urn:newsml:reuters.com:*:nL1N2QQ02J    
    HSBC's asset management division and fund manager TCW exited
Evergrande positions in September and August, Morningstar, a
research firm, said. Credit Suisse, not mentioned by
Morningstar, sold down its entire exposure to Evergrande debt
last year, the Financial Times reported on Friday.  urn:newsml:reuters.com:*:nFWN2QQ0BI
    Fellow Swiss bank UBS has Evergrande debt exposure totalling
about $283 million across multiple portfolios, Morningstar said
in its report. Ashmore's runs to $146 million.
    Morningstar had earlier noted BlackRock's increased exposure
but said in its Friday note that BlueBay had also been gradually
buying, believing default risks are in the price.  urn:newsml:reuters.com:*:nL1N2QN1XR
    Evergrande's dollar bonds have been tumbling since May when
it was tardy in paying suppliers. A $1 billion dollar bond with
a coupon payment due next week  VG158786753=  last traded at the
distressed level of 27.5 cents on the dollar. 
    Ashmore and HSBC declined to comment. Of the other fund
managers mentioned by Morningstar, only T. Rowe Price - which
closed its Evergrande position last year - had immediate comment
when contacted by Reuters.
    "A period of elevated high-yield default rates may lead to
dollar market access being shut for some weaker issuers," said
Sheldon Chan, portfolio manager of T. Rowe Price's Asia credit
bond strategy by email.
    "This may keep volatility elevated ... and present
attractive entry points to add exposure to the sector."

 (Reporting by Tom Westbrook; Editing by Kirsten Donovan)
 ((tom.westbrook@tr.com; +65 6973 8284;))