GERMAN FUND HALTS REDEMPTIONS
August 7th, 2007It’s just like musical chairs, boys and girls.
Via: Bloomberg:
Frankfurt Trust, the mutual fund manager of Germany’s BHF-Bank, stopped withdrawals from a fund after clients removed 20 percent of their money since the end of July amid concern about the U.S. subprime loan debacle.
The FT ABS-Plus fund, which includes residential mortgage- backed securities and collateralized debt obligations, halted redemptions on Aug. 3, the Frankfurt-based company said today. The 160 million-euro ($221 million) fund has a “small exposure” to subprime investments, spokesman Holger Ullrich said.
Defaults on U.S. housing loans to borrowers with patchy credit histories have reached a 10-year high, driving down the value of bonds backed by mortgages. Union Investment Asset Management Holding AG, Germany’s third-largest mutual fund manager, said on Aug. 3 it halted redemptions from a fund holding subprime mortgages after clients withdrew about 10 percent of the assets in the past month.
“The situation for the asset-backed securities and CDOs market has gotten much worse in the last few days because of the U.S. real estate crisis,” making it difficult to secure fair prices, the company said in a statement on its Web site.
Fulfilling rising redemption requests would have forced Frankfurt Trust to sell the securities far below their “fair” value, the company said. It is closing the fund to withdrawals and new investments for an unforeseen period “in the interest of investors.” Clients had withdrawn about 40 million euros since the end of last month, Ullrich said.
Sal. Oppenheim Jr. & Cie KgaA, Germany’s largest independent bank for the wealthy, acquired BHF-Bank from ING Groep NV, the biggest Dutch financial-services company, for 600 million euros in December 2004.
It’s happening in Europe too? Very not good.