Cairn buys UK commercial mortgage bonds assuming 100% default

Cairn Capital, the London-based asset-manager that oversees about $32bn, is betting that it will make money on UK commercial mortgage-backed securities even if most of the loans packaged in the bonds default. The investment firm expects to profit from the purchases because spreads on the top-rated portions of the notes are so wide, according to Stefano Loreti, senior portfolio manager at Cairn.

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