Wednesday, August 15, 2007

Australian Hedge Fund Loses 80%

From the Sydney Morning Herald

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.