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

SINOPAC FINANCIAL HOLDINGS

27/09/2021 11:18

(Adds exposures' detail and updates fund manager responses)
    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  HSBA.L  and TCW funds have closed positions.
    Morningstar's analysis, published on Sept. 24, also showed
that UBS  UBSG.S  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. HSBC declined to comment and TCW had no
immediate response when contacted by Reuters.
    Credit Suisse  CSGN.S , 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. UBS and Ashmore
declined to comment.
    Morningstar had earlier noted BlackRock's exposure had
recently increased but said in its Friday note that BlueBay had
also been gradually adding exposure.  urn:newsml:reuters.com:*:nL1N2QN1XR
    It did not give dollar totals for their exposures, though
two BlueBay funds with exposure of about $8 million and one
index-tracking fund managed by BlackRock  EMHK.K , with about
$1.5 million in exposure, were included in top exposure lists.
    Blackrock and BlueBay declined to comment.
    Evergrande's dollar bonds have been tumbling since May when
the group was late 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. 
    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,"
Sheldon Chan, portfolio manager of T. Rowe Price's Asia credit
bond strategy, said in an emailed response.
    "This may keep volatility elevated ... and present
attractive entry points to add exposure to the sector."

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