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ollie plimsolls

Us Sub-prime Losses Hit European Funds

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Telegraph

The continuing fallout from the collapse in US sub-prime mortgages has forced a UK listed fund that invests in this relatively risky form of debt to close.

Rising interest rates in the US have led to a big jump in defaults in the subprime mortgage sector, which lends money to those with poor credit ratings.

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Caliber Global Investment, whose investors include large City institutions such as Deutsche Bank, Axa Framlington and Jupiter, said this morning that it will return all of its cash to shareholders over the next twelve months.

The subprime difficulties have affected a number of hedge funds that invest in securities linked to these mortgages, pushing two funds run by Bear Stearns close to the point of collapse.

Carlyle Group, the US private equity giant, announced today that it was postponing the planned listing of a $415m fund that invests in bonds backed by mortgages.

In a statement, Caliber said there was "insufficient demand currently for investment through listed investment companies exposed to this asset class".

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I am sure this must be a repost but the link on the same page contains jaw dropping stuff which I had not seen.

Banks 'set to call in a swathe of loans'

Lombard Street’s warning comes as fresh data from the US National Association of Realtors shows that the glut of unsold homes reached a record of 8.9 months supply in May. Sales of existing homes slid to an annual rate of 5.99m.
The worst of the US property crisis has yet to hit since there is an overhang of $2,000bn of mortgages with adjustable rates which have yet to be reset. Many borrowers could see payments jump by half, or even double.

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Carlyle group have pulled the float of a new fund on the Amsterdam market

http://business.timesonline.co.uk/tol/busi...icle2001744.ece

Lots of other bond offerings have been pulled over the last few days and not just in the Hedge Fund/Private Equity area.

For example Kia cars of Korea have cancelled a $500 million debt issue

http://www.bloomberg.com/apps/news?pid=206...&refer=home

The collapse in this activity will kill the M&A market.

Anyone who works in the City of London should now start watching their backs because the big investment banks are losing one of their major sources of earnings. Expect bonuses to be slashed and redundancies to soar by Christmas.

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