Basis Capital Fund Management - the first Australian company to get caught up in the subprime mortgage rout - today said losses on its funds may exceed 80 percent, according to a Bloomberg report.
The deteriorating subprime mortgage market has prompted some of its creditors to force the sale of some assets which is causing the worst-then-expected losses, according to the report.
The Sydney-based hedge fund has been unable to "accurately estimate" the net asset value of units in its Yield Fund because of "further deterioration of market conditions," Basis said today in a letter sent to investors and obtained by Bloomberg.
"The situation in global structured credit markets remains fluid and uncertain," Basis said in the letter.
This is not a new announcement; this is an assessment of a fund we already knew about. But the amount of the losses should indicate the breadth and depth of the problems some funds are facing right now.
2 comments:
Combining this post with the previous about the Australian Fund, there may be if not a contradiction at least an equivocation in the reports. This post reports that the concern that “investors will demand their money back” which will cause problems for the funds. Specifically:
“Wednesday is final chance for investors to put in demands for their money back...”
While the previous post indicates that the problem for the Austrian fund was the creditors forcing sales. Specifically:
“The deteriorating subprime mortgage market has prompted some of its creditors to force the sale of some assets...”
Are not these two different situations (investors cashing-in vs. creditors calling notes due); albeit with the same results (fund bankrupt)? However, for purposes of understand market dynamics shouldn’t one keep this distinctions in mind?
This is a rethorical question - just sharing thoughts.
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