Credit market troubles hit two more funds

Date: Thursday, July 26, 2007
Author: Financial Times

Financial Times- Absolute Capital, an Australian hedge fund group that invests in collateralised debt obligations, has temporarily suspended redemptions for two of its funds, becoming the latest casualty of the crisis engulfing the US subprime mortgage market.

Absolute’s Yield Strategies Funds and Capital Yield Strategies Fund NZD, which together have A$200m invested, have suspended investor withdrawals until October 25 due to “the current lack of liquidity in global structured credit markets”.

The suspension comes days after Basis Capital, another Australian hedge fund group that is more seriously exposed to the subprime market, appointed Blackstone as financial adviser to two of its struggling funds.

Less than a handful of Australian hedge funds are thought to have a material exposure to the US subprime market, according to two investment consultants, although they may hold indirect investments via commitments to funds of hedge funds.

Absolute said it estimated July losses from its two funds at up to 6 per cent.